ANNUAL
REPORT
2016
Paladin Energy Ltd
CONTENTS
CORPORATE VALUES ........................................................................................ 4
PALADIN TODAY ............................................................................................... 4
KEY ACHIEVEMENTS ........................................................................................ 5
INSIGHTS FROM THE CEO ................................................................................ 7
MANAGEMENT DISCUSSION AND ANALYSIS ................................................... 9
Review of Operations ..............................................................................................10
Health and Safety ...................................................................................................26
Financial Review .....................................................................................................28
SUSTAINABLE DEVELOPMENT ........................................................................ 42
Environment ...........................................................................................................43
Corporate Social Responsibility .............................................................................46
Our People ..............................................................................................................54
CORPORATE GOVERNANCE STATEMENT ......................................................... 58
DIRECTORS’ REPORT ....................................................................................... 59
Remuneration Report.............................................................................................68
FINANCIAL REPORT ......................................................................................... 84
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PALADIN ENERGY LTD | ANNUAL REPORT 2016 Contents of the Financial Report ...........................................................................84
Consolidated Income Statement ...........................................................................85
Consolidated Statement of Comprehensive Income .............................................86
Consolidated Statement of Financial Position ......................................................87
Consolidated Statement of Changes in Equity ......................................................88
Consolidated Statement of Cash Flows ................................................................90
Notes to the Consolidated Financial Statements .................................................91
Directors’ Declaration ............................................................................................141
Independent Audit Report ......................................................................................142
Additional Information ............................................................................................144
Corporate Directory ................................................................................................151
PALADIN ENERGY LTD
ACN 061 681 098
The annual report covers the Group consisting of Paladin Energy Ltd (referred throughout as the
Company or Paladin) and its controlled entities. Paladin Energy Ltd is a company limited by shares,
incorporated and domiciled in Australia. Its registered office and principal place of business is:
Paladin Energy Ltd, Level 4 502 Hay Street Subiaco WA 6008
Through the use of the internet, we have ensured that our corporate reporting is timely, complete,
and available globally at minimum cost to the Company. All press releases, financial statements and
other information are available on our website www.paladinenergy.com.au
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PALADIN ENERGY LTD | ANNUAL REPORT 2016 I
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CORPORATE VALUES
• Create shareholder wealth by developing
the considerable opportunities Paladin has
and continues to generate.
• Become a major player in the global
uranium supply market.
• Operate at global best practice with
particular emphasis on safety and the
environment.
• Reward employee performance and provide
a fulfilling work environment.
• Contribute to the growth and prosperity of
the countries in which Paladin operates
by conducting operations in an efficient
and effective manner and by seeking out
opportunities for expansion.
• Respond to the attitudes and expectations
of the communities in which it operates as
part of its commitment to corporate social
responsibility.
• Act with integrity, honesty and cultural
sensitivity in all of its dealings.
PALADIN TODAY
OVERVIEW
• Paladin’s value is based on five key drivers - production, quality pipeline, proven team, industry
positioning and sustainability of operations.
OPERATIONS
• Langer Heinrich Mine (LHM)
◦ Focus on process optimisation and cost reduction.
◦ Successful process innovation at Langer Heinrich should provide a pathway to C1 cash
costs(1) substantially lower than recent experience.
• Kayelekera Mine (KM)
◦ Placed on care and maintenance due to low uranium prices and non-profitability.
◦ Maintaining plant, infrastructure and critical aspects of intellectual property and operational
knowhow to allow for a quick restart, when justified.
◦ Care and maintenance to preserve the orebody to recommence production once the
uranium price provides sufficient incentive.
INNOVATION & PROJECT PIPELINE
• Proven track record in mining and processing innovation.
• Established in-house technical strength.
• Consolidating a unique, geographically diversified asset base.
POSITIONING GOING FORWARD
• Only non-aligned, independent, pure-play uranium producer.
• Long-term business strategy and vision is to continue to strengthen through key partnerships.
• Maintain Paladin as a partner of choice.
• Technical innovation, process optimisation and cost reduction an ongoing focus.
• Project pipeline able to drive organic growth.
1 Refer to ‘Non IFRS Measure’ in Financial Review section.
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
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KEY ACHIEVEMENTS
KEY ACHIEVEMENTS FOR THE YEAR
• Debt Reduction
• Cash Flow Optimisation
• Advanced Strategic Initiatives
AUGUST 2015
Cash flow optimisation initiatives implemented
including:
MARCH 2016
Repurchase of additional US$25M of Convertible
Bonds due April 2017 for US$23.5M to reduce
outstanding amount to US$212M.
• corporate staff numbers reduced by
approximately 60%. No salary increases at
the corporate office.
• ex-pat numbers at KM reduced by 50%.
• management personnel agreed a further
10% reduction in salary in addition to their
original 10% reduction.
• number of Non-Executive Directors reduced
from five to four and the board reduced its
remuneration structure.
• focus on rationalisation and consolidation
of the workforce with a reduction in overall
headcount across the Group and certain
roles made redundant over the period.
Additionally, where natural attrition
occurred, only those roles deemed to be
critical were replaced.
SEPTEMBER 2015
Repurchase of US$20M of Convertible Bonds
due April 2017 for approximately US$18.5M.
NOVEMBER 2015
Repurchase of additional US$11M of Convertible
Bonds due April 2017 for approximately US$9.9M.
DECEMBER 2015
Repurchase of additional US$6M of Convertible
Bonds due April 2017 for approximately US$5.6M.
MARCH 2016
US$60.9M LHM Syndicated Loan Facility repaid
and terminated.
JUNE 2016
US$25.0M LHM Revolving Credit Facility put in
place and was undrawn as at 30 June 2016.
JULY 2016
Signing of non-binding terms sheet with CNNC
Overseas Uranium Holding Ltd (COUH) (the
existing 25% minority shareholder in LHM), to
sell a 24% interest in LHM. The sale is expected
to raise US$175M in cash for the Company with
the Company working towards a formal close of
the transaction in the fourth quarter of CY2016.
JULY 2016
Signing of a binding terms sheet with MGT
Resources Limited (MGT) for sale of up to a 75%
interest in the Company’s 100% owned Manyingee
project. On closing of the transaction, MGT
will acquire a 30% initial interest in Manyingee
for US$10M cash with an option to acquire an
additional 45% interest within twelve months for
US$20M cash. The transaction is conditional
on definitive documentation and a vote of MGT’s
shareholders expected to be concluded in the
fourth quarter of CY2016.
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
KEY ACHIEVEMENTS
ACHIEVED
WHAT WE SET OUT TO DO IN 2016
• 2016 production guidance for LHM in the range of 5.0 to 5.4Mlb U3O8.
◦ Revised guidance of approximately 4.8Mlb U3O8. Achieved 4.763Mlb.
◦ Lower production largely due to issues with performance of water return sumps from
tailings storage facility no.3.
• Continue to increase efficiency and productivity for LHM through successful process
innovation.
◦ The C1 unit cost of production(1) for FY2016 was a record low of US$25.88/lb, a decrease of
11% from FY2015.
• Strengthen balance sheet through debt reduction.
◦ US$122.9M of debt repaid.
◦ Repurchased US$62M of Convertible Bonds due April 2017 to reduce
outstanding amount to US$212M.
◦ Repaid and terminated the US$60.9M LHM Syndicated Loan Facility.
• Focussed cost reduction and optimisation efforts to achieve group-wide
sustainability.
◦ Underlying EBITDA(1) for FY2016 of US$24.8M, a US$45.7M improvement
from FY2015.
◦ Underlying all-in cash expenditure(1) per pound of uranium production for FY2016 was
US$38.75/lb, a decrease of 24% compared to FY2015.
◦ Achieved objective of being cash flow positive(1) on an ‘all in’ basis for FY2016 excluding one-
off restructuring costs and capital management.
WHAT WE PLAN TO DO IN 2017
• Maximise operating cash flows from LHM through optimisation and cost reduction initiatives
whilst preserving the integrity of the long-term mine plan.
• Maintain our exploration business and KM on a minimal expenditure and care and
maintenance basis until such time as uranium price recovers substantially.
• Minimise corporate costs and administrative expenses.
• Pursue initiatives with respect to partnerships, strategic investment, funding and
corporate transactions.
• Close strategic initiatives.
• Production guidance for LHM of approximately 3.8 to 4.0Mlb U3O8.
• LHM C1 unit cash costs, under revised operating plan, expected to be in the range of US$19/lb
to US$22/lb.
• Combined expenditure on corporate costs, exploration and KM care and maintenance is
forecast to be approximately US$14M.
• All-in cash expenditure for the full-year FY2017 to be in the range of
US$32/lb to US$34/lb.
1
Refer to Non-IFRS Measure in Financial Review section
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
INSIGHTS FROM THE CEO
ALEXANDER MOLYNEUX | CEO
DEAR STAKEHOLDERS,
During FY2016, Paladin made significant headway in its strategy to survive the low uranium price
environment whilst at the same time preserve options to grow when the market environment normalises.
Importantly, we maintained a safe workplace for our 1,326 employees and contractors located across
four continents and continued to maintain the highest environmental standards.
On behalf of our Paladin team, I can characterise
the company’s key traits as follows:
Paladin’s current strategy is based around four key
elements, including:
• We are a global leader in uranium – Paladin is
the 8th largest uranium company in the world
by capacity and the largest pure-play uranium
producer listed on the ASX.
• We are maximising operating cash flows from
Langer Heinrich Mine through optimisation and
cost reduction initiatives whilst preserving the
integrity of the long-term mine plan.
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• Our exploration business and Kayelekera Mine
are being maintained on a minimal expenditure
and care and maintenance basis until such time
as uranium price recovers substantially.
• Corporate costs and administrative expenses
are minimised.
• We have been pursuing initiatives with respect
to partnerships, strategic investment, funding
and corporate transactions.
Through the combination of our focussed strategy,
the quality of our asset base and more importantly,
the quality of the Paladin team implementing
the strategy, we have really moved the Company
ahead in FY2016.
When I look at our performance for the year, what
stands out for me is the impressive cost reductions
achieved. These are important because a lower
cost structure is the key to having a business that’s
sustainable through to the period until uranium
prices recover. Langer Heinrich Mine’s C1 cash cost
of production set a record low for FY2016 and that’s
despite the fact that average plant feed grade was
lower. Our ‘all in’ company-wide cash expenditure
dropped from US$50.75/lb of uranium produced in
FY2015 to US$38.75/lb in FY2016. This 24% drop was
driven by optimisations across the entire business.
• Langer Heinrich Mine is a strategic tier one
mine – Our main operating asset, Langer
Heinrich Mine in Namibia can be undisputedly
considered a tier one mine in the uranium
industry. It’s the fourth largest open-pit uranium
mine in the world, has a remaining production
life in excess of 20-years and is within the first
quartile of global cash costs. As a testament
to its quality, Langer Heinrich Mine generated
US$46.1M of free operating cash flow in FY2016
despite the low uranium price environment.
• Optimisation is a core competency for us –
Paladin has an industry leading position in
being able to introduce optimisation projects
that enhance our operating margins. Our
Bicarbonate Recovery Plant (BRP) installation
at Langer Heinrich Mine was largely designed
in-house and since
in
its
FY2015 and FY2016, it has halved our reagent
costs. The resultant saving has been reflected
in an approximately US$6/lb reduction in our
cash cost of uranium production. The team
that designed the BRP continues to work on
future optimisation initiatives to ensure we get
maximum value from our resources.
implementation
• We believe Paladin provides the best senior
leverage to uranium price upside – The uranium
market will eventually reach a post-Fukushima
incident normalisation where uranium prices
are much higher than now. Paladin has unique
leverage to uranium price upside. We are
generally more exposed to spot prices vs. fixed
contract prices than peer companies and we
can also quickly bring on an additional 2-2.5Mlb
of annual production through the re-start of our
Kayelekera Mine in Malawi, which has been on
care and maintenance since mid-2014.
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
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Subsequent to the end of the financial year, we
announced two proposed transactions, which in
combination could raise in excess of an additional
US$200M for Paladin. The first transaction relates
to the execution of a non-binding terms sheet to sell
24% of Langer Heinrich Mine to CNNC Overseas
Uranium Holdings Ltd (COUH) for US$175M and the
second transaction relates to a binding terms sheet
to sell a 30% initial interest in Manyingee Project to
MGT Resources Limited for US$10M, with the grant
of an option to allow them to increase their stake to
75% for the payment of an additional US$20M. The
purpose of these transactions is to continue to de-risk
Paladin’s balance sheet. The proceeds will be used in
combination with our existing cash to fully repay the
US$212M outstanding under our 2017 Convertible
Bond. Once that bond is repaid, our next major debt
maturity will not be until 2020 and our ongoing cash
interest bill will be half of what was paid in FY2016,
leaving us in a much stronger position to ride out the
current weak uranium market.
Coming back to the uranium market, we continue
to expect a normalisation to occur at some point
and that will bring with it much higher prices. It
seemed apparent to me that the market was already
in the early stages of a recovery from the Fukushima
Incident earlier in FY2016. After having a period below
US$30/lb in May-July 2014, uranium prices started
to recover along with increased transaction volumes
in the uranium market. The improved conditions
were driven by Japan re-starting reactors that were
closed after the Fukushima Incident and improved
conditions in a number of other nuclear markets.
However, in January and February 2016 the uranium
market reversed its course and by March the uranium
spot price fell below US$30/lb and has remained
there since. Paladin believes this recent weakness is
mostly the result of US-centric issues at this time.
In early CY2016 natural gas prices continued to
decline and there was a lot of regulatory uncertainty
in the US concerning how various governments would
approach the requirement to stimulate clean energy
investment. In unregulated power markets, utilities
had become concerned that some of their nuclear
reactors may have less long term viability compared
with cheap natural gas or heavily subsidised wind and
solar. Feedback from US utility customers to Paladin
was that their purchasing activities were scaled back
until there is more certainty.
Recent news indicates we may see the certainty US
buyers need coming back quite quickly. On 1 August
2016 the New York Public Service Commission
approved a Clean Energy Standard, which supports
nuclear as a form of clean energy and provides
subsidies to reflect the value of carbon dioxide
emissions avoided by nuclear power generation. As
an immediate response to this, Exelon Generation
announced it would take over ownership of the
James A. FitzPatrick Nuclear Power Plant in Scriba,
New York from Entergy Corporation, with operation
of the power plant to be continued whereas it had
previously been slated for closure. A number of other
US states are now considering similar rule changes
or legislation.
Short-term issues aside, the case for uranium is
quite positive. Demand continues to accelerate in
new markets, with all of the ‘BRICS’ countries (i.e.,
Brazil, Russia, India, China and South Africa) rapidly
growing their nuclear power capacity and increasing
their reliance on nuclear power as a proportion of
overall power generation. On the supply side, current
low prices are starting to constrain supply. In April
2016 Cameco announced production cuts at three of
its mine / mill complexes, which we estimate could
reduce annualised supply by 5-7Mlb per year. On 11
July 2016, Sibanye Gold announced the closure of its
Cooke mine, which will remove a further 600,000lb of
annual uranium equivalent production.
Finishing off, I want to point out that the Paladin
team has been an incredible asset for shareholders
in improving the sustainability of our business. A
number of valued team members left our business in
FY2016 due to necessary headcount reductions. The
remaining team members have ‘pulled together’ by
doing more with less and in many cases lower pay
scales. Paladin’s team members are world class
experts in their respective fields and have operated
very diligently to deliver results that protect the
interests of shareholders. I personally am thankful
for the efforts of the team.
Yours faithfully
ALEXANDER MOLYNEUX
CEO
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MANAGEMENT DISCUSSION
AND ANALYSIS
The following Management Discussion and Analysis (“MD&A”) for Paladin Energy Ltd
(“Company”) and its controlled entities (“Group”) should be read in conjunction with the
Consolidated Financial Statements for the year ended 30 June 2016. The effective date of this
report is 24 August 2016.
available to investors. We evaluate materiality
with reference to all relevant circumstances,
including potential market sensitivity.
Additional information relating to the Company,
including public announcements, is available at
www.paladinenergy.com.au.
The financial information presented in this MD&A
has been extracted from the attached financial
statements. For the purpose of preparing
our MD&A, we consider the materiality of
information. Information is considered material
if: (i) such information results in, or would
reasonably be expected to result in, a significant
change in market price or value of our shares;
or (ii) there is a substantial likelihood that a
reasonable investor would consider it important
in making an investment decision; or (iii) it would
significantly alter the total mix of information
FORWARD LOOKING STATEMENTS
Some of the statements contained in this MD&A, including those relating to strategies and
other statements, are predictive in nature, and depend upon or refer to future events or
conditions, or include words such as “expects”, “intends”, “plans”, “anticipates”, “believes”,
“estimates”, “with an expectation of”, “is expected”, “are expected”, or similar expressions
that are forward looking statements. Forward looking statements include, without limitation,
the information concerning possible or assumed further results of operations as set forth
herein. These statements are not historical facts but instead represent only expectations,
estimates and projections regarding future events and are qualified in their entirety by the
inherent risks and uncertainties surrounding future expectations generally.
The forward looking statements contained in this MD&A are not guarantees of future
performance and involve certain risks and uncertainties that are difficult to predict. The
future results of the Group may differ materially from those expressed in the forward looking
statements contained in this MD&A due to, among other factors, the risks and uncertainties
inherent in the business of the Group. The Company does not undertake any obligation to
update or release any revisions to these forward looking statements to reflect events or
circumstances after the date of this MD&A or to reflect the occurrence of anticipated events.
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REVIEW OF OPERATIONS
PROJECT LOCATIONS AND RESOURCE OVERVIEW
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Unless specifically noted, Mineral Resources were prepared and first disclosed under the JORC
Code 2004. These estimates have not been updated since to comply with JORC Code 2012 on the
basis that the information that the estimates are derived from has not materially changed since it
was last reported.
Paladin’s attributable Mineral Resource inventory, with effect from 30 June 2016, includes 154,352t
U3O8 (340.3Mlb) at 0.07% U3O8 in the Indicated and Measured categories (including ROM stockpiles)
and 68,352t of U3O8 (150.7Mlb) at 0.07% U3O8 in the Inferred Resource category. A summary of
the status of each of the advanced projects is detailed in the following table. This table does not
include additional JORC(2004) and NI 43-101 compliant Mineral Resources from Bikini, Andersons,
Mirrioola, Watta or Warwai deriving from Paladin’s 82.08% ownership of Summit Resources Ltd, nor
from the Duke Batman or Honey Pot deposits.
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
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URANIUM PRODUCTION
PROJECT
OVERVIEW
*Langer Heinrich Mine - 75%
(Namibia, Southern Africa)
*Kayelekera Mine – 85%
(Malawi, Southern Africa)
The Company’s cornerstone
asset commenced production
in 2007. The Stage 3 expansion
is complete with production at
5.2Mlb per annum (pa). Studies
are underway for a further
expansion.
Paladin’s second uranium
mine, capable of operating at
nameplate of 3.3Mlb pa.
MINING METHOD/
DEPOSIT TYPE
OUTLOOK
MINERAL RESOURCES
Conventional open
pit; calcrete
Project life of
20 years
M&I (inc
stockpiles):
119.7Mt @ 0.047%
(124.1Mlb U3O8)
Inferred:
8.7 Mt @ 0.047%
(9.0Mlb U3O8)
Conventional open
pit; sandstone
Currently
on care and
maintenance
due to low
uranium
prices
M&I (inc
stockpiles):
15.0Mt @ 0.072%
(23.9Mlb U3O8)
Inferred:
5.4 Mt @ 0.06%
(7.4Mlb U3O8)
URANIUM DEVELOPMENT
PROJECT
OVERVIEW
MINING METHOD/
DEPOSIT TYPE
OUTLOOK
MINERAL RESOURCES
*Aurora Project – 100%(
Labrador, Canada)
Paladin’s first entry into
Canada. Resource definition
and additional exploration has
been planned for.
Open pit -
underground;
metasomatic
**Manyingee Project – 100%
(Western Pilbara, Western
Australia)
Resource update has been
completed and planning for a
field leach trial is underway.
Now includes the Carley
Bore deposit and adjacent
tenements.
In-situ leach;
sandstone
Oobagooma Project – 100%
(West Kimberley, Western
Australia)
A key pipeline asset for
Paladin.
In-situ leach;
sandstone
*Valhalla, Skal & Odin
Deposits – 91.04%
(Queensland, Australia)
One of Paladin’s significant
Australian assets.
Metallurgical studies
are progressing towards
developing a comprehensive
processing flowsheet.
Open pit
-underground;
metasomatic
*Bigrlyi Deposit –
41.71%(Northern Territory,
Australia)
Limited work within the JV
tenements. Co-operative
arrangement to assess nearby
regional targets.
Open pit -
underground;
sandstone
*Angela Deposit – 100%
(Northern Territory,
Australia)
Planning has been completed
for resource extension and
development drilling.
Open pit -
underground;
sandstone
M&I:
Inferred:
M&I:
Inferred:
47.6Mt @ 0.10%
(100.8Mlb U3O8)
21.9 Mt @ 0.08%
(39.8Mlb U3O8)
13.8Mt @ 0.07%
(20.7Mlb U3O8)
22.8 Mt @ 0.04%
(20.8Mlb U3O8)
Exploration
target:
8.0Mt @ 0.12%-
0.14% (U3O8)
M&I:
Inferred:
M&I:
Inferred:
57.2Mt @ 0.07%
(93.7Mlb U3O8)
16.3 Mt @ 0.06%
(22.0Mlb U3O8
4.7Mt @ 0.14%
(14.1Mlb U3O8)
2.8 Mt @ 0.11%
(7.1Mlb U3O8)
Inferred:
10.7Mt @ 0.13%
(30.8Mlb U3O8)
Resource
definition
andextension
drilling is
ongoing
3 year staged
feasibility
study required
3 year
reserve/
resource
drilling
required
Development
dependenton
market
conditions
Future
direction of
projectwill be
determined
by market
conditions
Future
direction of
projectwill be
determined
by market
conditions
Mineral Resources are quoted inclusive of any Ore Reserves that may be applicable.
Mineral Resources detailed above in all cases represent 100% of the resource – not the participant’s share.
*
**
(a)
(b)
Conforms to JORC(2004) guidelines & is NI 43-101 Compliant, in addition the Mineral Resource for the Michelin deposit
conforms to the JORC(2012) guidelines.
Conforms to JORC(2012) guidelines.
For Kayelekera, the Government of Malawi holds a 15% equity interest in the subsidiary, Paladin (Africa) Limited, the holder
of the Kayelekera Mining Licence.
For Valhalla, Skal & Odin, Paladin’s interest is based on 50% deriving from the Isa Uranium Joint Venture and 41.04% via
Paladin’s 82.08% ownership of Summit Resources Ltd.
Langer Heinrich and Kayelekera Mineral Resources have been depleted for mining to the end of June 2016 and June 2014
respectively.
M&I = Measured and Indicated.
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
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NAMIBIA
LANGER HEINRICH MINE (LHM)
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Paladin through its Namibian subsidiary, Langer Heinrich Uranium (Pty) Ltd 75% and CNNC
Overseas Uranium Holding Limited 25%
Following the sale of a 25% equity stake to CNNC
Overseas Uranium Holding Limited (CNNC),
a wholly-owned subsidiary of China National
Nuclear Corporation, Paladin owns 75% of LHM
in Namibia through its Namibian subsidiary,
Langer Heinrich Uranium (Pty) Ltd (LHUPL).
Paladin purchased the Langer Heinrich project
in August 2002 and, following development and
construction, production commenced from the
open pit mine and conventional alkaline leach
plant in early 2007, with annual production
of 2.7Mlb of U3O8 achieved in FY2009. Soon
afterwards, a Stage 2 expansion was undertaken
to
increase production to 3.7Mlb pa U3O8,
followed by construction and commissioning
of the Stage 3 expansion, completed in FY2012
resulting in production over 5Mlb.
Langer Heinrich is a surficial, calcrete type
uranium deposit containing a Mineral Resource
of 56,298t U3O8 at a grade of 0.047% U3O8 in the
Measured and Indicated categories (including
ROM stockpiles) in seven mineralised zones
designated Detail 1 to 7 (see figure below), along
the length of the Langer Heinrich valley within
the 15km length of a contiguous paleodrainage
system. The deposit is located in the Namib
Desert, 80km from the major seaport of Walvis
Bay.
Operations
Langer Heinrich produced 4.763Mlb (2,161t) U3O8
in FY2016, down 5% from the previous year’s total
of 5.137Mlb (2,284t) U3O8. Recoveries through
the plant decreased by 1.3% from the previous
year to 86.3% with a decrease in feed grade of
9% to 699ppm. Plant throughput increased by
5% to 3.57 Mt.
With the continued decline in uranium price,
initiatives to reduce the operating and unit costs
at LHM continued to be the principal focus of
attention, with a number of improvements again
identified and implemented. The BRP continues
to perform well above design expectations
and after a minor modification to improve
performance further has stabilised well. This
technology may now be considered established
and offers a great deal of further potential
benefit. Since the introduction of BRP, reagent
costs per pound U3O8 have reduced by almost 5%
and almost all of this reduction is due to BRP,
although foreign exchange rate movements have
also contributed beneficially. The BRP involves
leading edge technology for which Paladin has
developed and owns the intellectual property.
Suitable patent protection has been applied for
to protect this very valuable intellectual property
asset that is expected to have broad application
throughout the uranium processing sector.
Future production and possible expansion
options to allow the treatment of much lower
feed grade ore remain under development, with
significant progress being achieved. Various
evaluations have been completed or planned on
piloting and testing programmes to test the most
promising options and enhancements. The goal
of this work is to increase production at lower
12
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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The Ore Reserve was estimated from the original un-
depleted Measured and Indicated Mineral Resource
of 151.8Mt at a grade of 0.054% U3O8. During the
year the Mineral Resource estimate for the project
was updated to incorporate all the additional drilling
completed on site since 2010.
The additional
Reverse Circulation (RC) drilling amounted to some
29,954 holes for 1,044,922m added to the resource
dataset. It also allowed for an important increase
in the definition of the non-mineralised basement
profile. This updated basement profile was then
used to further refine the Ore Reserve pit design.
The Mineral Resource estimate was completed using
Multi-Indicator Kriging and incorporates a specific
adjustment based on expected mining parameters
which have now been adjusted from those used in the
2010 Mineral Resource to incorporate information
derived from actual mining. As a result, additional
dilution and mining recovery are not included in the
Ore Reserve estimation. Changes from the 2010
Mineral Resource have been a significant transfer on
material from Indicated to Measured category and a
substantial reduction in Inferred material due to the
increased drilling density. Overall there was a less
than 1% reduction in contained metal. Differences
between the updated Ore Reserve are related to
depletion due to mining, refinement of the pit design
based on the new basement profile and better
definition of mineralisation edges due to increased
drilling density and removal of material from the Ore
Reserve as a result of on-going conversion of existing
pits to tailings facilities. There has been no change to
either the Mineral Resource or Ore Reserve cut-off
grades, both remaining at 250ppm.
Exploration (EPL3500)
EPL3500 previously covered the western extension
of the mineralised Langer Heinrich paleochannel.
An application to convert the EPL to a mining lease
has progressed through the regulatory process and is
with the Minister awaiting final approval. During the
year a test passive seismic survey was conducted in
order to cost effectively determine the likely basement
location with promising results. It is expected that the
survey area will be significantly expanded in the 2017
financial year.
ore grades with lower unit costs. The focus is also
on improved process efficiencies and operability and
the BRP is a good example of the nature of outcomes
being sought.
A focus on cost reduction and efficiency again remains
at the forefront going into FY2017 with an expectation
of further significant future benefits.
Mineral Resources and Ore Reserves Estimation
Mineral Resources and Ore Reserves conforming to
both the JORC(2012) code and NI 43-101 are detailed
below.
Mineral Resource Estimate
(250ppm U3O8 cut-off)
Mt
Grade %
U3O8
t U3O8
Mlb U3O8
Measured
64.3
0.052
33,216
Indicated
21.5
0.046
9,845
73.2
21.7
Measured +
Indicated
85.8
0.050
43,061
94.9
Stockpiles
33.9
0.039
13,327
29.2
Inferred
8.7
0.050
4,069
9.0
(Figures may not add due to rounding and are quoted inclusive of
any Ore Reserves, and have been depleted for mining to the end of
June 2016).
Ore Reserves
Economic analysis on this resource has indicated a
break-even cut-off grade of 250ppm.
Ore Reserve Estimate
(250ppm U3O8 cut-off)
Mt
Grade %
U3O8
t U3O8
Mlb U3O8
Proved
44.9
0.053
23,725
52.30
Probable
13.1
0.049
6,361
14.02
Stockpiles
33.9
0.039
13,237
29.18
Total
92.00
0.047
43,323
95.51
(Ore Reserve has been depleted for mining to the end of June
2016.)
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
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MALAWI
KAYELEKERA MINE (KM)
Kayelekera Mine (KM), which is currently on
care and maintenance (C&M), is located in
northern Malawi, 600km north of the country’s
capital city, Lilongwe, and 52km west of the
regional administrative and commercial centre
of Karonga.
Kayelekera
is a sandstone-hosted uranium
deposit, associated with the Permian Karoo
the Kayelekera
sediments and hosted by
member of the North Rukuru sedimentary
outcrop of the Karoo System. The mineralisation
is associated with seven variably oxidised, coarse
grained arkoses, separated by shales and
mudstones. Uranium mineralisation occurs as
lenses, primarily within the arkose layers and,
to a lesser extent, in the mudstone. The lowest
level of known mineralisation is at a depth of
approximately 160m below surface.
Impact Assessment
Kayelekera is owned 100% by Paladin (Africa)
Limited (PAL), an 85% subsidiary of Paladin. In
July 2009, Paladin issued 15% of the equity in
PAL to the Government of Malawi (GoM) under
the terms of the Development Agreement signed
between PAL and the Government in February
2007, which established the fiscal regime and
development framework for KM. PAL operates
KM under the provisions of Environmental
Certificate 27.3.1, granted
in March 2007,
following approval of the Kayelekera Project
Environmental
(EIA)
and Mining Licence ML152, granted in April
2007. ML152 covers an area of some 55km²
surrounding the Kayelekera deposit and was
granted for a period of 15 years, renewable for
further 10-year periods. The EIA contained a
Social Impact Assessment and Management
implemented during the
Plan, which was
construction and operational phases of KM, with
certain components continuing during C&M.
Under the terms of the Development Agreement,
PAL has undertaken various corporate social
responsibility
in relation
(CSR) obligations
to operation of a Social Responsibility Plan,
Local Business Development and Community
Consultation.
Construction took place in 2007-9 and KM operated
for five years from 2009-2014, producing a total of
10.7Mlb U3O8 in that period. As a consequence of
sustained losses due to low prevailing uranium
prices in the wake of the 2011 Fukushima incident,
production at KM was suspended in May 2014.
The operation was placed on C&M until such time
as economic conditions improve sufficiently to
enable KM to resume production with sustained
profitability. More than 50% of the project’s
total reserves and resources remain for future
development. This is sufficient to provide for 2.5Mlb
pa of production, with the potential to produce
strong cash flows for at least another six years.
Additional regional exploration has the potential to
extend that further.
C&M Operations
KM completed its second full year on C&M,
with no production since May 2014 and no
sales revenue since December 2014. The
key focus at KM remains: ensuring the safety
of C&M personnel and the security of the
project assets; maintaining idled plant and
equipment in a fit state of readiness to facilitate
a rapid restart of operations when a decision
is made to do so; maintaining legal and social
obligations encompassing community relations,
environmental and radiological monitoring; and
treating and discharging surplus water stocks at
KM to reduce KM’s water balance prior to the
onset of the next rainfall season.
rainfall
During production,
run-off water
captured in the operational area was stored on
site and was recycled for use in processing of
uranium ore. Since the operation went on C&M,
this has no longer been occurring, necessitating
the controlled release of treated water in order
to reduce KM’s water balance prior to the onset
of the next rainfall season. PAL modified a
section of the KM processing plant to treat water
to remove contaminants prior to release to meet
internationally recognised standards.
PAL’s license to treat and release water was
renewed by the GoM in October 2014 for the 2015
wet season, with the government maintaining
the prior strict conditions regulating critical
water quality parameters, including the World
Health Organization
(WHO) drinking water
guideline
for uranium content. Controlled
treated water release recommenced in January
2016 and continued without incident. In late
June, discharge was again suspended due to the
very low receiving water level in the local river
system. Comprehensive monitoring of samples
has been undertaken at the end of the discharge
outlet and upstream and downstream from KM.
At 30 June 2016 water inventories had reduced in
the two major storage ponds and the dams are
on track to reach their pre-wet season targets
and are well below the levels for the same period
last year.
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
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A feasibility study for recommencement of production
at KM was completed during the year, results showed
that KM remains a valuable strategic asset that can
be quickly returned to production when justified by a
higher uranium price environment. This study will be
reviewed and updated in the coming year.
Mineral Resources and Ore Reserves Estimation
Mineral Resources and Ore Reserves are unchanged
from those reported in 2014. As part of the Kayelekera
re-start study it is expected that an updated Mineral
Resource will be completed which will incorporate
previous drilling undertaken to the west of the
current pit. This extensional drilling only intersected
mineralisation at depth and, given the current and
projected uranium prices, this is not expected to
contribute to additional Ore Reserves.
Mineral Resources and Ore Reserves conforming to
both the JORC(2004) code and NI 43-101 are detailed
below.
Ore Reserves
Economic analysis on this Mineral Resource has
indicated a break-even cut-off grade of 400ppm U3O8.
Ore Reserve at 400ppm U3O8 Cut-off
Mt
Grade
ppm
U3O8
t U3O8
Mlb U3O8
Proved
0.39
1,168
457
1.00
Probable
5.34
882
4,709
10.38
Stockpiles
1.59
756
1,199
2.64
Total
7.32
870
6,365
14.03
Mineral Resources at 300ppm U308 Cut-off
(Figures may not add due to rounding and are depleted for mining
to end of June 2014).
Mt
Grade
ppm
U3O8
t U3O8
Mlb U3O8
The underlying Ore Reserve is unchanged from that
announced in 2008 and has only been depleted for
mining until 30 June 2014 (when mining ceased).
Measured
0.74
1,011
753
1.66
Exploration
Indicated
12.71
700
8,901
19.62
Total
Measured &
Indicated
13.45
717
9,654
21.28
Stockpiles
1.59
756
1,199
2.64
Inferred
5.4
623
3,334
7.4
(Figures may not add due to rounding and are quoted inclusive of
any Ore Reserves and are depleted for mining to end of June 2014
when mining ceased).
The Mineral Resource estimate
is based on
Multi Indicator Kriging techniques with a specific
adjustment based on parameters derived from the
mining process.
The exploration group continues to work in areas
close to the mine in order to identify any additional
targets within easy access of the processing plant.
Whilst mineralised areas have been identified these
are not currently considered attractive enough to
warrant drilling. This activity is expected to continue
until all the Karoo sandstone outcrop areas within the
vicinity have been covered.
The Malawian Government is currently implementing
a new Cadastral system and is in the process
of introducing a new mining act. The company
was expecting that, while this was in progress a
moratorium on the grant of new licences would be
in place however the company was notified of the
grant of two of its applications – EPL417 Rukuru and
EPL418 Uliwa. Whilst some work is expected to be
performed on both licences, due to current market
conditions the company has applied for a waiver from
the expenditure commitments on both. The other 3
licences are still in application.
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
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CANADA
MICHELIN PROJECT
Paladin Energy Ltd, through its wholly-owned subsidiary Aurora Energy Ltd (Aurora), holds rights
to 91,500 hectares within the Central Mineral Belt of Labrador (CMB), Canada, approximately
140km north of Happy Valley-Goose Bay and 40km southwest of the community of Postville.
Paladin completed the acquisition of Aurora
in February 2011 and, in March 2012, the
Nunatsiavut Government, a regional, aboriginal
government formed in 2005, lifted the three year
moratorium on the mining, development and
production of uranium on Labrador Inuit Land.
Five of Paladin’s six deposits in this project
area fall within these lands. Paladin started
exploration in the summer of 2012.
Aurora claims cover a significant area of
prospective ground over the CMB. The CMB
contains publically reported 83.9Mlb U3O8
Measured and Indicated Mineral Resources
as well as an additional 86.6Mlb U3O8 Inferred
Mineral Resource in 12 deposits, half of which
are covered by the Aurora tenements. The
largest of these deposits is Michelin, the flagship
of Aurora’s CMB project and one of the world’s
top five albitite-hosted resources.
On 26 June 2014, Paladin announced a revised
Mineral Resource estimate for the Michelin
Deposit, conforming to both the JORC(2012)
Code and Canadian National Instrument 43-
101. The updated Mineral Resource Estimate
for the deposit has provided added confidence
in the character of the mineralisation with the
significant increase in Measured and Indicated
category material. Importantly, in addition, the
near surface open pittable portion of the deposit
now contains a substantial increase in both
uranium grade and contained metal.
compilation
Over the last financial year Aurora carried out
an extensive soil survey during the northern
summer field season in order to better define the
mineralised trends within the Michelin – Rainbow
(MRT) area. The results from the soil survey will
be combined with a comprehensive geophysical
data
exercise
and
conducted by Condor Consulting. It is expected
that the results from this data integration will
allow for the definition of additional targets in the
region and will aid in the identification of ‘blind’
mineralisation. Additional infill geochemical
surveys are planned for the northern summer
season commencing September 2016 to identify
drill targets in this zone.
analysis
Additional Potential
The Michelin Deposit is still open along strike
and at depth. Drilling programmes have already
been designed to both infill and extend the
existing Mineral Resource and these will be
executed when conditions allow. In addition,
there are also a number of promising targets
within the MRT and wider CMB, which are
currently being explored and are expected
to contribute to the economic viability of the
project. Mineral Resources for deposits within
the Michelin project are detailed below.
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
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Deposit
Measured Mineral Resource
Indicated Mineral Resource
Inferred Mineral Resource
Cut-off 0.05% &
0.02% U3O8
Michelin
Jacques Lake
Rainbow
India
Nash
Gear
Total
Mt
Grade %
t U3O8
Mt
Grade %
t U3O8
Mt
Grade %
t U3O8
15.6
0.9
0.2
0.10
0.09
0.09
15,458
21.9
747
193
6.0
0.8
1.2
0.7
0.4
0.10
0.07
0.09
0.07
0.08
0.08
22,702
4,327
655
826
564
270
8.8
8.1
0.9
3.3
0.5
0.3
0.12
0.05
0.08
0.07
0.07
0.09
10,378
4,103
739
2,171
367
279
16.6
0.10
16,398
(36.2Mlb)
31.0
0.09
29,343
(64.7Mlb)
21.9
0.08
18,037
(39.8Mlb)
(Figures may not add due to rounding)
The Mineral Resources for the deposits are reported at cut-off grades that contemplated underground (0.05%
U3O8 cut-off) and open pit (0.02% U3O8 cut-off) mining, based on preliminary economic assumptions carried
out by Aurora.
Exemption from Non-Resident
Ownership Restriction
On 22 June 2015 Paladin received notification from
the Canadian Government that its submission to be
the majority owner of a uranium mine at the Michelin
Project has been approved. Under the current Non-
Resident Ownership Policy (NROP), non-resident
mining companies can own 100% of an exploration
project but, by the stage of first production, there must
be a minimum level of Canadian resident ownership
in individual uranium mining projects of 51%.
This posed an obvious limitation to the Michelin
Project. Given
the Company’s global mining
experience and reputation, it has always considered
itself as an owner/operator of its uranium projects.
The granting of an exemption from NROP allowing
Paladin to proceed eventually to production at the
Michelin Project will permit Paladin to introduce
a suitable minority joint venture partner at the
appropriate time should this be desired.
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
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QUEENSLAND
In early 2015, the Queensland Government reinstated the previous ban on uranium mining. This
decision has caused Paladin to slow the development of its uranium holdings in the Mount Isa
region of northwest Queensland.
Paladin has an 82.08% majority shareholding in
Summit Resources Limited (Summit) acquired
in 2007. Summit’s wholly-owned subsidiary,
Summit Resources (Aust) Pty Ltd (SRA), operates
the Isa Uranium Joint Venture (IUJV) and the
Mount Isa North Project (MINP). Additionally,
the company wholly owns the Valhalla North
Project (VNP) immediately to the north of the
MINP area.
three projects
The
include 10 deposits
containing 106.2Mlb U3O8 Measured and
Indicated Mineral Resources as well as 42.2Mlb
U3O8 Inferred Mineral Resources. The bulk of the
mineralisation is concentrated in the Valhalla
deposit. Of this, 95.8Mlb U3O8 Measured and
Indicated Mineral Resources as well as 37.4Mlb
U3O8 Inferred Mineral Resources are attributable
to Paladin. 51.4% of the Mineral Resources are
located at Valhalla; the rest is distributed over the
Bikini, Skal, Odin, Andersons, Mirrioola, Watta,
Warwai, Duke Batman and Honeypot deposits.
The table below lists JORC(2004) and NI 43-101
compliant Mineral Resources by deposit, on a
100% project basis.
Deposit
Measured & Indicated Mineral
Resources
Inferred
Mineral Resources
Paladin
Attribution
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I
Grade
ppm
t U3O8
Mt
Grade
ppm
t U3O8
Cut-off
ppm U3O8
230
250
250
250
250
250
250
250
250
250
Valhalla*
Skal*
Odin*
Bikini*
Andersons*
Watta
Warwai
Mirrioola
Duke Batman*
Honey Pot
Mt
34.7
14.3
8.2
5.8
1.4
830
640
555
497
1,449
28,778
9,177
4,534
2,868
2,079
0.5
1,370
728
Total
64.9
742
48,164
34.0
9.1
1.4
5.8
6.7
0.1
5.6
0.4
2.0
0.3
2.6
643
519
590
493
1,639
404
365
555
1,100
700
563
5,824
708
3,430
3,324
204
2,260
134
1,132
325
1,799
19,140
91.0%
91.0%
91.0%
82.0%
82.0%
82.0%
82.0%
82.0%
100%
100%
Total
Resource
Attributable to
Paladin
58.5
743
43,470
(95.8Mlb)
29.9
568
16,983
(37.4Mlb)
(Figures may not add due to rounding).
* Deposits estimated using Multiple Indicator Kriging within a wireframe envelope. All other Mineral
Resources are estimated using Ordinary Kriging with an appropriate top cut. Data for all deposits is a
combination of geochemical assay and downhole radiometric logging.
Metallurgical test work on all the deposits completed during the year has, to a large extent, validated
the previous assumptions. The mineralisation from all of the deposits can be radiometrically sorted
to a greater or lesser extent with no appreciable increase in deleterious gangue materials. Other
forms of mineral sorting may be trialled in the future to improve the sorting efficiency of some of the
deposits. Follow on alkaline leach test work also indicates that the material from all of the deposits
can be leached using this methodology, though with variable levels of uranium recovery broadly
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
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in line with the work previously undertaken. Work in
the future will be focussed on optimising the potential
flow sheet, improving recoveries in both the sorting
and leach steps and analysing reagent consumption
in order to better define the economics of all of the
projects.
The exploration
through separate
is managed
projects, the locations are shown in the following map
and details are as follows:
ISA URANIUM JOINT VENTURE (IUJV)
Summit Resources (Aust) Pty Ltd (SRA) 50% and
Manager Mount Isa Uranium Pty Ltd (MIU) 50%
The IUJV covers ground containing the Valhalla, Odin
and Skal uranium deposits 40km north of Mount Isa.
Mineral Resource estimates are included in the table
on page 18.
Participants in the joint operation are SRA and
Mount Isa Uranium Pty Ltd (MIU), each holding a
50% interest, with SRA as manager. MIU is a wholly-
owned subsidiary of Valhalla Uranium Pty Ltd (VUL),
a formerly public company and now a wholly-owned
subsidiary of Paladin. Paladin’s effective participating
interest in the IUJV is 91.04% through its ownership of
82.08% of the issued capital of Summit.
Ground subject to the IUJV covers 17.24km2 at Valhalla
and 10km2 at Skal. These two areas lie within a larger
holding of contiguous tenements of 934km2 held
100% and managed by SRA and Paladin as outlined
in the map above. Valhalla is now covered by MDL510
and Skal by MDL517 which also includes the Bikini
and Mirrioola Deposits.
MOUNT ISA NORTH PROJECT (MINP)
The MINP is located 10 to 70km north and east of
Mount Isa and contains numerous uranium prospects.
The area is 100% held and managed by SRA utilising
Paladin staff and expertise. Exploration continues
on MINP where Summit holds 934km2 of granted
tenements that are prospective for uranium, copper
and base metals. In early 2015 the Queensland
Government extended the licences for a further three
years to 2018. The tenements are centred on the
city of Mount Isa. The project includes the Bikini,
Mirrioola, Watta, Warwai and Andersons uranium
deposits which are covered by MDL’s 509, 511 and
513 respectively, as well as numerous other uranium
prospects. Mineral Resource estimates are shown in
the table on page 18.
VALHALLA NORTH PROJECT (VNP)
to
The VNP is located on EPM 12572 totalling 70km2,
situated approximately 80km north of the Valhalla
deposit. The geological setting is similar to the
Summit/Paladin projects
the south where
albitised basalts with interbedded metasediments
are mineralised along east-west and north-south
structures in Eastern Creek Volcanics. The project
includes the Duke Batman and Honey Pot deposits
(covered by MDL’s 507 and 508 respectively) and
Mineral Resource estimates for these deposits are
listed in the table on page 18.
QUEENSLAND URANIUM POLITICS
The expectation in Queensland is that a conservative
government will strongly support uranium mining
while a Labor government (under current policy) will
not permit it. After the Labor government was elected
in March 2015 it indicated that it would continue to
allow exploration for uranium but would not permit
mining, this situation is expected to remain until such
time as there is a change in government.
19
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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WESTERN AUSTRALIA
MANYINGEE URANIUM PROJECT (MANYINGEE)
Manyingee is located in the north-west of Western Australia, 1,100km north of Perth and
85km inland from the coastal township of Onslow. The property is comprised of three mining
leases covering 1,307 hectares. Paladin purchased Manyingee in 1998 from Afmeco Mining and
Exploration Pty Ltd (AFMEX), a subsidiary of Cogema from France.
Between 1973 and 1984, approximately 400 holes
were drilled by the previous owners to establish
the extent and continuity of the sediment-hosted
uranium mineralisation contained in permeable
sandstone in paleochannels. Field trials by
the Manyingee
AFMEX demonstrated
sandstone-hosted uranium deposit is amenable
to extraction by in-situ recovery (ISR).
that
In 2012, Paladin drilled 96 holes for 9,026m of
Rotary Mud and 242m of PQ core. The drilling
resulted in a new geological model and, on 14
January 2014, Paladin announced an updated
Mineral Resource for the Manyingee Project.
The Mineral Resource estimate conforms to
both the JORC(2012) Code and NI 43-101.
Mineral Resource Estimate (250ppm U3O8 and
0.2m cut-off)
Mineral
Resource
Category
Tonnes
M
Grade
ppm
U3O8
Metal
t U3O8
Metal
Mlb
U3O8
Following the receipt of the regional and local
scale hydrological study from consultants CDM
Smith the company is progressing its application
for a small scale field leach trial (FLT). It is
expected that the formal application will be
submitted to the Department of Mines and
Petroleum late in the second half of CY2016.
On the 21st July 2016 the company announced
that it had signed a binding terms sheet with
MGT Resources Limited (MGT) for it to acquire
up to 75% of the Manyingee project in a two stage
process. The first stage, upon closing of the
transaction, is that MGT will acquire 30% of the
Manyingee project for a US$10M cash payment
and will form a joint venture over the project
with the company (Manyingee JV). MGT will have
the option of acquiring an additional 45% of
the Manyingee JV from the company for US$20
in cash, exercisable for a period of 12 months
following the Manyingee JV’s preparation of a
plan to conduct an FLT. Also under the terms of
the agreement, various share options are also
available to both parties.
Indicated
Inferred
8.37
5.41
850
850
7,127
4,613
15.71
10.17
CARLEY BORE
(Figures may not add due to rounding.)
The geology of the deposit is well understood,
having been subject to extensive exploration
over a number of years with the stratigraphic
sequence being defined by the comprehensive
dataset of downhole electric logs. A total
of 35 water bores, in place since 2012, are
used for ongoing monitoring of physical and
chemical properties of the aquifer containing
the uranium mineralisation. Paladin believes
that the Mineral Resources on the mining leases
can be increased and that commencement of
production at the project can be achieved within
a 4-5 year time frame.
The company completed the purchase of the
Carley Bore project from Energia Minerals
Limited (EMX) early in FY2016. Consisting of
three contiguous exploration licences, this new
project area is located 100km south of Paladin’s
Manyingee Uranium Project (Manyingee) as
shown in the location map. The Carley Bore
deposit, as estimated by EMX, contains an
Indicated Mineral Resource of 5.0Mlb U3O8
grading 420ppm and an
Inferred Mineral
Resource of 10.6Mlb U3O8 grading 280ppm
(JORC (2012)) at a cut-off grade of 150ppm U3O8.
S
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
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Mineral Resource Estimate (150ppm U3O8 cut-off)
Mineral
Resource
Category
Tonnes
M
Grade
ppm U3O8
Metal
t U3O8
Metal
Mlb U3O8
Indicated
Inferred
5.4
17.4
420
280
2,268
4,825
5.0
10.6
The large tenement package contains geology similar
to that which hosts the Carley Bore and Manyingee
deposits as well as numerous identified regional drill
anomalies which offer additional targets warranting
follow-up investigation. The established resource
inventory and potential upside of the combined
tenement portfolio will ensure that a single ISR facility
in the region is able to operate with a long processing
life.
The potential to develop a significant mining operation
with a long mine life extending well beyond 20 years
within a new uranium district is compelling. In-
house studies indicate the acquisition of Carley Bore
will be value accretive independent of the significant
resource upside Paladin considers exploration may
deliver.
Exploration drilling is planned to start in October 2016
and will focus on resource drilling at Carley Bore as
well as limited regional exploration to test potential
for additional uranium deposits.
Carley Bore and Manyingee Tenement Package
Location
OOBAGOOMA URANIUM PROJECT
(OOBAGOOMA)
This acquisition has increased the Company’s JORC
(2012) Indicated Mineral Resources within the area by
more than 30% to 20.7Mlb U3O8 at a grade of 680ppm,
and the Inferred Mineral Resources by more than
100% to 20.9Mlb at a grade of 415ppm. Carley Bore
remains open to the north and south and Paladin
believes there is excellent potential within this land
package to increase this resource base by at least a
further 15Mlb to 25Mlb.
The Oobagooma Project (held 100%) is located in the
West Kimberley region of Western Australia, 1,900km
north-north-east of Perth and 75km north-east of the
regional centre of Derby. The project now comprises
one application for an EPL covering approximately
450km².
In 1998, Paladin acquired a call option in relation to
the purchase of Oobagooma. This arrangement was
more recently varied so that Paladin Energy Minerals
NL is now the applicant and will, upon the anticipated
grant, hold the exploration licence directly.
The Oobagooma project area was explored by AFMEX
between 1983 and 1986, during which time extensive
zones of uranium mineralisation were discovered.
AFMEX identified a historic resource of 21.9Mlb
U3O8 at 0.12% U3O8 with a 0.035% cut-off. Paladin
has classified this mineralisation as an exploration
target, but, after examining the AFMEX data, Paladin
believes that following validation of all existing data,
there is good potential to upgrade the exploration
target within the area to 40 to 50Mlb U3O8.
21
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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Previous tonnages, grades, assays and other technical data
for Oobagooma are taken from historical records prior to the
implementation of JORC or NI 43-101. While the data are
believed to have been acquired, processed and disclosed by
persons believed to be technically competent, it is unverifiable
at present. A Competent Person as defined under the JORC
Code or Qualified Person as defined under NI 43-101 has
not done sufficient work to classify the historical estimate
as current Mineral Resources. Paladin is not treating any
historical estimates as current Mineral Resources as defined
in either the JORC Code or NI 43-101 and the historical
estimates should not be relied upon.
BIGRLYI JOINT VENTURE (BJV)
Energy Metals Limited 53.29% and Manager
Northern Territory Uranium Pty Ltd 41.71%
Southern Cross Exploration NL 5%
The BJV covers ten granted Exploration Licences in
Retention (ELRs), two granted Exploration Licences
(ELs), and a number of applications all located in the
Ngalia Basin approximately 320km north-west of
Alice Springs in the Northern Territory. Participants
in the Project are Energy Metals Limited (53.29%
and Manager), Northern Territory Uranium Pty Ltd
(a wholly- owned subsidiary of Paladin) (41.71%) and
Southern Cross Exploration NL (5%).
Energy Metals Limited (EME), as the Manager of
the BJV, announced in June 2011 the completion of
a Pre-Feasibility Study (PFS) for the Bigrlyi Project
showing that, under current market conditions, it is
not economically viable. A substantial increase in
the resource base that has been identified to date is
required, especially resources amenable to open pit
mining to help the economic outcome of this project.
EME is exploring the wider Ngalia Basin for additional
resources on its 100% owned licences.
In
late June 2011, EME released an updated
Mineral Resource estimate, conforming to both the
JORC(2004) guidelines and NI 43-101, based on all
drilling to date. The breakdown of Mineral Resource
category is detailed below and is reported at a 500ppm
U3O8 cut-off grade.
BIGRLYI
Mineral
Resource
Classification
Tonnes
Mt
Grade
ppm
U3O8
Metal
t U3O8
Metal
Mlb
U3O8
Indicated
Inferred
4.7
2.8
1,366
6,400
14.1
1,144
3,200
7.1
Additionally, in the Ngalia Basin, Paladin holds, as
part of the BJV, Mineral Lease North (MLN) and
Mineral Claim South (MCS) applications covering the
Karins deposit, together with interests in granted
ELRs covering the Walbiri (58%) and Malawiri (48%)
prospects; both in partnership with EME. Paladin
also holds 100% of the Mt Wedge retention lease
applications in the Ngalia Basin. On 1 July 2015
Energy Metals announced an Inferred (JORC 2012)
Mineral Resource for the Karins deposit using a cut-
off grade of 200ppm U3O8. On 27 October 2015 Energy
Metals announced an Inferred (JORC 2012) Mineral
Resources for the Sundberg, Walbiri and Hill One
deposits, all using a cut-off grade of 200ppm U3O8.
Previous explorers defined exploration targets on
all leases and it is expected that exploration will be
carried out on these leases, in the coming years to
further expand the resource base of the project.
KARINS
Mineral
Resource
Classification
Tonnes
Mt
Grade
ppm
U3O8
Metal
t U3O8
Metal
Mlb U3O8
Inferred
1.2
556
691
1.5
SUNDBERG
Mineral
Resource
Classification
Tonnes
Mt
Grade
ppm
U3O8
Metal
t U3O8
Metal
Mlb U3O8
Inferred
0.3
281
72
0.2
HILL ONE
Mineral
Resource
Classification
Tonnes
Mt
Grade
ppm
U3O8
Metal
t U3O8
Metal
Mlb U3O8
Inferred
0.01
208
2
0.04
WALBIRI
Mineral
Resource
Classification
Tonnes
Mt
Grade
ppm U3O8
Metal
t U3O8
Metal
Mlb U3O8
Inferred
5.1
636
3,226
7.1
22
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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ANGELA-PAMELA PROJECT
Angela is a sandstone-hosted roll-front type
uranium deposit (held 100% by Paladin) with
an Inferred Mineral Resource of 30.8Mlb U3O8
at 0.13% U3O8 located in the Amadeus Basin of
Australia’s Northern Territory, approximately
25km from Alice Springs.
In November 2006, Cameco Australia Pty Ltd
(Cameco) and Paladin, in a 50:50 joint venture,
won a tender in competition with numerous other
applicants, for an Exploration Licence covering
the Angela and Pamela uranium prospects.
The joint venture conducted drilling programmes
during 2009 and 2010, including 172 holes
totalling 32,810m. Cameco formally withdrew
from the joint venture in 2013 after determining
that the project did not meet its investment
criteria at that time and Paladin then assumed
100% ownership.
The Mineral Resource estimate is based on 794
holes totalling 180,468m and covers the Angela
(1 to 5) and Pamela deposits. The mineralisation
plunges shallowly, approximately 9°, to the west
and the resource of the larger of the deposits,
Angela 1, has been defined up to 4.3km to the
west at depths up to 600m and remains open.
The cut-off for the Mineral Resource is a
combination of grade greater than or equal to
300ppm U3O8 and thickness greater than 0.5m.
The Mineral Resource estimate conforms to the
JORC(2004) Guidelines and complies with NI 43-
101.
Mineral
Resource
Classification
Tonnes
Mt
Grade
ppm
U3O8
Metal
t U3O8
Metal
Mlb
U3O8
Inferred
10.7
1,310
13,980
30.8
Importantly the mineralisation includes a higher
grade core at a cut-off of 1500ppm which still
contains 20.2Mlb at a grade of 2,500ppm U3O8.
Other
than minor environmental clean-up
and monitoring no additional work has been
performed on the project.
NIGER (WEST AFRICA)
PROJECT AGADEZ
Due to the on-going security situation in Niger and the likelihood of difficulty in renewing the
company’s licences when they became due the company has now formally returned the 3 licences
and 1 application back to the Nigerien government and has withdrawn from the country.
MINERAL RESOURCE AND ORE RESERVE SUMMARY
The following tables detail the Company’s Mineral Resources and Ore Reserves and the changes that
have occurred within FY2016. The only changes to Mineral Resource and Ore Reserve information
were due to a combination of Mineral Resource update in incorporate additional drilling, depletion
for mining to 30 June 2016 at Langer Heinrich as well as minor reductions due to the establishment
of in-pit tailings facilities which have sterilised some mined-out areas within the resource/reserve,
the surrender of tenements in Niger and the addition of a number of small deposits in the Joint
Venture with Energy Metals. There were no other material changes to the Company’s Mineral
Resources and Ore Reserves.
23
PALADIN ENERGY LTD | ANNUAL REPORT 2016
30 June 2015
30 June 2016
Change
Mineral Resources
M tonnes
grade %
U3O8
Metal t
M tonnes
grade %
U3O8
Metal t
M tonnes
Metal t
I
I
S
S
Y
L
A
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A
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N
A
N
O
S
S
U
C
S
D
T
N
E
M
E
G
A
N
A
M
I
Canada
Measured
Jacques Lake
S
N
O
I
T
A
R
E
P
O
F
O
W
E
I
V
E
R
Indicated
Inferred
Michelin
Rainbow
Gear
Inda
Jacques Lake
Michelin
Nash
Rainbow
Gear
Inda
Jacques Lake
Michelin
Nash
Rainbow
Malawi
Measured
Kayelekera
Indicated
Inferred
Stockpiles
Namibia
Measured
Langer Heinrich
Indicated
Inferred
Stockpiles
Niger
Inferred
Australia
0.86
15.57
0.21
0.35
1.2
6.04
21.93
0.68
0.76
0.3
3.26
8.1
8.81
0.51
0.91
0.74
12.71
5.35
1.59
19.60
62.94
16.99
32.09
0.087
0.099
0.092
0.077
0.069
0.072
0.104
0.083
0.086
0.093
0.067
0.051
0.118
0.072
0.082
0.101
0.070
0.062
0.076
0.056
0.054
0.058
0.040
747
15,458
193
270
826
4,327
22,701
564
655
279
2,171
4,103
10,378
367
739
753
8,901
3,334
1,199
10,912
34,051
9,842
12,867
0.86
15.57
0.21
0.35
1.2
6.04
21.93
0.68
0.76
0.3
3.26
8.1
8.81
0.51
0.91
0.74
12.71
5.35
1.59
64.34
21.48
8.70
33.85
0.087
0.099
0.092
0.077
0.069
0.072
0.104
0.083
0.086
0.093
0.067
0.051
0.118
0.072
0.082
0.101
0.070
0.062
0.076
0.052
0.046
0.047
0.039
747
15,458
193
270
826
4,327
22,701
564
655
279
2,171
4,103
10,378
367
739
753
8,901
3,334
1,199
33,216
9,845
4,069
13,237
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
+44.74
-41.46
-8.29
+1.77
+22,304
-24,206
-5,773
+370
Takardeit
23.21
0.021
4,943
-
-
-
-23.21
-4,943
Measured
Valhalla
Indicated
Bigrlyi
Andersons
Bikini
Duke Batman
Odin
Skal
Valhalla
Manyingee
Angela
Bigrlyi
Andersons
Bikini
Hill One
Karins
Sundberg
Walbiri
Duke Batman
Honey Pot
Mirrioola
Odin
Skal
Valhalla
Watta
Warwai
Manyingee
Inferred
24
16.02
4.7
1.4
5.77
0.53
8.2
14.3
18.64
8.37
10.7
2.8
0.1
6.7
-
-
-
-
0.29
2.56
2
5.8
1.4
9.1
5.6
0.4
5.41
0.082
0.136
0.145
0.050
0.137
0.055
0.064
0.084
0.085
0.131
0.114
0.164
0.049
-
-
-
-
0.110
0.070
0.056
0.059
0.052
0.064
0.040
0.036
0.085
13,116
16.02
6,400
2,079
2,868
728
4,534
9,177
15,662
7,127
13,980
3,200
204
3,324
-
-
-
-
325
1,799
1,132
3,430
708
5,824
2,260
134
4,613
4.7
1.4
5.77
0.53
8.2
14.3
18.64
8.37
10.7
2.8
0.1
6.7
0.01
1.2
0.26
5.1
0.29
2.56
2
5.8
1.4
9.1
5.6
0.4
5.41
0.082
0.136
0.145
0.050
0.137
0.055
0.064
0.084
0.085
0.131
0.114
0.164
0.049
0.021
0.056
0.028
0.064
0.110
0.070
0.056
0.059
0.052
0.064
0.040
0.036
0.085
13,116
6,400
2,079
2,868
728
4,534
9,177
15,662
7,127
13,980
3,200
204
3,324
2
691
72
3,226
325
1,799
1,132
3,430
708
5,824
2,260
134
4,613
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
+0.01
+1.20
+0.26
+5.10
+2
+691
+72
+3,226
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
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30 June 2015
30 June 2016
Change
Ore Reserves
M
tonnes
grade %
U3O8
Metal
t
M
tonnes
grade %
U3O8
Metal
t
M
tonnes
Metal
t
Kayelekera
Malawi
Proven
Probable
Stockpiles
Namibia
Langer Heinrich
Proven
Probable
Stockpiles
0.39
5.34
1.59
15.80
52.83
32.09
0.117
0.088
0.076
0.057
0.055
0.040
457
4,709
1,199
8,955
29,273
12,867
0.39
5.34
1.59
44.90
13.14
33.85
0.117
0.088
0.076
0.053
0.049
0.039
457
4,709
1,199
-
-
-
-
-
-
23,725
+29.10
+14,770
6,361
-39.69
-22,912
13,236
+1.76
+369
(Mineral Resources and Ore Reserves quoted on a 100% basis.)
All of the Company’s Mineral Resources and Ore
Reserves are internally peer reviewed at the time
of estimation and are subject to ongoing review, as
and when required. Should any Mineral Resources
or Ore Reserves be utilised within a Bankable or
Definitive Feasibility Study, it is expected that an audit
by independent experts would be conducted. For both
mine sites, ongoing reconciliations between Mineral
Resource, Ore Reserve, Mining Production and Mill
Feed tonnes and grade are completed on a regular
basis and, to date, there have been no material
differences identified in any of these processes.
The information above relating to exploration, mineral
resources and ore reserves is, except where stated, based
on information compiled by David Princep B.Sc P.Geo and
Stephanie Raiseborough B.E., both of whom are members
of the AusIMM. Mr Princep and Ms Raiseborough each
have sufficient experience that is relevant to the style of
mineralisation and type of deposit under consideration and to
the activity that he/she is undertaking to qualify as Competent
Persons as defined in the 2012 Edition of the “Australasian
Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves”, and Mr Princep and Ms Raiseborough as
a Qualified Person as defined in NI 43-101. Mr Princep and
Ms Raiseborough are full-time employees of Paladin Energy
Ltd and consent to the inclusion of this information in the
form and context in which it appears.
URANIUM DATABASE
Paladin owns a substantial uranium database,
compiled over 30 years, of investigations by the
international uranium mining house Uranerzbergbau
in Germany, incorporating all aspects of the uranium
mining and exploration
industry worldwide and
including detailed exploration data for Africa and
Australia.
of
consists
Since acquiring this substantial uranium database,
of
which
technical, geological, metallurgical, geophysical
and geochemical resources,
including resource
evaluations, drill hole data, downhole logging data,
airborne radiometric survey results, open-file
collections
extensive
data, and photographic archives, the Company has
maintained and expanded this valuable library of data.
The data continues to be utilised by the Company as an
asset for project generation to evaluate opportunities
and generate new uranium prospects and projects for
acquisition and exploration.
DEEP YELLOW LTD (DYL)
Paladin 14.82%
Deep Yellow Limited (DYL) is an ASX-listed, Namibian-
focussed advanced stage uranium exploration
company. It also has a listing on the Namibian Stock
Exchange.
DYL’s operations in Namibia are conducted by its 100%
owned subsidiary Reptile Uranium Namibia (Pty) Ltd
(RUN). RUN holds 100% of two Exclusive Prospecting
Licences (EPLs) covering 1,131km2 and another three
EPLs under two different joint ventures of which RUN
is also the operator. All of these EPLs are situated in
the Namib Naukluft Desert Park inland from Walvis
Bay and south and west of Paladin’s LHM.
The company’s current focus is on defining a more
reasonable processing route for material from
its Tumas calcrete deposits and to this end has
delivered a large bulk sample from the Tumas
Zone 1 deposit to Marenica Energy Ltd’s U-pgrade
testwork programme early in CY2016. The company
has reported encouraging results from the testwork
and has successfully demonstrated that upgrading of
uranium into a low mass concentrate is feasible.
The company is currently pursuing a mineral resource
update for the Tumas Zone 1 and Zone 2 deposits
incorporating an updated geological model based on
information sourced from the recent infill drilling and
bulk sampling exercise.
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
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HEALTH AND SAFETY
Paladin is “committed to provide and maintain a safe and healthy work environment with the aim
of ‘Zero Harm’ from occupational injuries and illnesses in the work place”. The Company also
“considers excellence in radiation management essential to our business success and is fully
committed to achieving minimum radiation exposure to its workers, members of the public and the
surrounding natural environment and minimising the potential impact by the safe management of
radioactive waste at its uranium mining and processing operations” as stated in its Occupational
Health and Safety Policy and Radiation Policy respectively.
Paladin’s safety and health performance of its operations is measured through the external
internationally recognised National Occupational Safety Association (NOSA) Five Star System
ensuring transparency and complementing its own internal audit processes. During the year,
Paladin undertook one external NOSA grading audit at the LHM retaining a 4 Star Platinum grade
rating.
In addition, the Company’s annual Lost Time Injury Frequency Rate (LTIFR) was reduced to 1.8 from
2.4(2) in the previous year. For FY2016, there were five Lost Time Injuries (LTIs) compared to seven(3)
LTIs for the previous year.
Operational
Area
Langer Heinrich Mine
Kayelekera Mine
Employees
Mine
Contractors
Other
Contractors
Employees
Mine
Contractors
Other
Contractors
Hours Worked
756,259
1,176,536
218,903
523,725
Lost Time
Injuries
Fatalities
LTIFR
2
0
2.6
2
0
1.7
1
0
4.6
Langer Heinrich Mine
Total LTIFR = 2.3
Duration Rate=35.2
0
0
0
0
0
0
0
92,493
0
0
0
Kayelekera Mine
Total LTIFR = 0.0
Duration Rate =0.0
Operational
Area
Perth
Exploration
Group
Corporate
Office
Employees
Contractors
Paladin Employees
All Contractors
Hours Worked
53,446
16,685
690
1,350,115
1,488,622
Lost Time
Injuries
Fatalities
LTIFR
0
0
0
Perth LTIFR
= 0.0
Duration
Rate=0.0
0
0
0
0
0
0
Exploration
LTIFR = 0.0
Duration Rate=0.0
2
0
1.5
3
0
2.0
Paladin Group +
All Contractors
LTIFR = 1.8
Duration Rate =35.2
FY2016 COMPANY SAFETY STATISTICS
2
3
2015 Annual reported quoted LTIFR of 2.1 for FY2015. This has been updated to reflect a LTI initially reported as a
FAI and upgraded to an LTI after the closure of the reporting period.
2015 Annual reported quoted 6 LTI’s. This was updated after the closure of the reporting period to reflect a FAI
upgraded to an LTI. Actual LTI’s for 2015 is 7.
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
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Lost Time Injury (LTI):
Work injury that results in an absence from work for at least
one full day or shift, any time after the day or shift on which
the injury occurred.
Lost Time Injury Frequency Rate (LTIFR):
Number of lost time injuries inclusive of fatalities per
million hours worked.
Duration Rate:
Average number of workdays lost per injury.
LANGER HEINRICH MINE
During the year, LHM reported five LTIs, of which two
were LHM employees and three were contractors.
The site’s annual LTIFR decreased from 3.0 to 2.3 with
the decrease being attributed to a continued focus on
safety, health, and radiation (SHR) management and
training.
The mine’s 2016 NOSA grading audit, resulted in the
operation retaining a 4 Star Platinum (Health, Safety
and Environment) grade rating. The resulting audit
score of 84.4% is an increase over the previous years
result of 82.6%.
LHM has continued to focus on training, further
up-skilling and broadening of the employees and
contractors safety and health knowledge base
to ensure a safer work environment. This focus
also extended to incident investigation with both
management and supervisory personnel receiving
training on the Incident Cause Analysis Method.
LHM is actively involved with the Namibian Uranium
Association, a leading source of advocacy, training
and research on uranium, health and safety related
issues. LHM participates in the Chamber of Mines
Safety Committee who together with a group of
Mines Safety Managers conduct quarterly peer safety
reviews.
The 2015 Annual Radiation Report(4) was compiled
and delivered to the Namibian Radiation Protection
Authority (NRPA) in March 2016. Radiation doses
(excluding natural background) reported include:
• The mean dose to Designated Workers was 1.3
mSv, compared with 3.1 mSv in 2014;
• The dose to Non-Designated Workers was 1.2
mSv (compared to 1.6 mSv in 2014); and
• The dose to a hypothetical group living on the
site boundary (Remote Gate) for the entire 2015
year would have been 2.2 mSv (including natural
background). This compares with the mean
world member of the public dose as reported by
the United Nations Scientific Committee on the
Effects of Atomic Radiation (UNSCEAR) of 2.4
mSv.
KAYELEKERA MINE
KM continues to operate under care and maintenance.
The site did not report any LTIs during the reporting
period. The site’s annual LTIFR decreased from 1.3 to
0. KM has achieved 726 LTI free days with 1,364,715
man hours worked at 30 June 2016. This outcome is
the result of the continued focus on high risk tasks
and an emphasis on risk management of these
tasks. The continued in-house training of employees
concentrating on behaviour based safety as well as
employees being actively encouraged to report all
potential safety issues and incidents has led to a
reduction in workplace injuries.
Internal NOSA based health, safety and environment
audits were conducted for the period May 2015 to
June 2016. These audits are aimed at identifying
and addressing problems in preparation for the next
external NOSA audit planned for June 2017.
KM commenced using the “Take 5” risk assessment
system during the reporting period. The Take 5
system is a straightforward tool used to identify and
control hazards before employees start a task. All
site personnel receive ongoing training on the use of
this system.
The 2015 Annual Dose Report was compiled and
delivered to all employees and contractors at KM. The
mean radiation dose for workers for 2015 was 0.1 mSv
as compared to 1.9 mSv in 2014. This lower mean
dose for workers can be attributed to the cessation
of production with workers no longer handling any
radioactive material in form of uranium ore and
final product. Therefore there are no employees or
contractors classified as Radiation Workers in the
2015 results. These workers are now grouped into
one similar exposure group.
The long lived radioactive dust concentrations and
radon decay product concentrations are monitored
around the site to provide an indication of ambient
conditions and also to provide baseline data for when
production resumes.
EXPLORATION
Paladin’s exploration activities included soil sampling
in Canada and limited ground surveys in Malawi. No
LTIs were recorded for the year with the LTIFR rate
remaining at 0.
4
Calendar Year
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
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FINANCIAL REVIEW
OPERATIONAL OVERVIEW
The Group has two uranium mines in Africa(5), uranium exploration projects in Australia, Africa and
Canada, and a strategy to become a major uranium mining house. The Company is incorporated
under the laws of Western Australia with a primary share market listing on the Australian
Securities Exchange (“ASX”) and additional listings on the Toronto Stock Exchange (“TSX”) in
Canada; as well as the Munich, Berlin, Stuttgart and Frankfurt Stock Exchanges in Europe; and
the Namibian Stock Exchange in Africa.
LHM
LHM commenced production in 2007 with a
capacity of 2.7Mlb U3O8 pa. After operating
at this level for a sustained period of time,
construction of the Stage 2 expansion to 3.7Mlb
U3O8 pa commenced in CY2008. LHM reached
the Stage 2 design capacity in December 2009.
The plant consistently operated at the 3.7Mlb
U3O8 pa rate from the beginning of CY2010.
Construction of the Stage 3 expansion to 5.2Mlb
U3O8 commenced at the beginning of CY2010 and
was completed on 31 March 2012. Commercial
production was declared from 1 April 2012. The
plant achieved Stage 3 design performance in
FY2013.
In FY2014, the focus turned to process innovation
The plant
and production optimisation.
achieved record annual production totalling
5.822Mlb(6) U3O8 for FY2014, 6% higher than
FY2013. In FY2015 the production optimisation
strategy continued and focused on the better
utilisation of existing equipment, operator and
supervision training and the further integration
of process control. Production was 5.037Mlb
U3O8. Process innovation was focused on
the Bicarbonate Recovery Plant (BRP). The
BRP was commissioned in early March 2015
and apart from minor downtime to complete
priority construction punch list items, the plant
has run continuously since, at or above design
throughput. The process performance of the
plant is substantially better than predicted and
bicarbonate recovery levels are much higher
than forecast.
In FY2016, the plant achieved annual production
of 4.763Mlb U3O8. In the September quarter,
plant production was affected by a decrease
in throughput caused by reduced availability
associated with planned annual maintenance and
5
6
Langer Heinrich Mine, Namibia (operating).
Kayelekera Mine, Malawi (on care and
maintenance).
Langer Heinrich Mine production volumes were
restated and include an adjustment to in-circuit
inventory.
equipment reconfiguration (e.g. scrubber relining
and reconfiguration of BRP). Overall recovery was
also lower, caused principally by an atypical ore
type which was unexpected, but fed for the whole
quarter due to mine scheduling constraints. In the
June quarter, U3O8 production was impacted by a
decrease in ore milled that was associated with
a lack of recycled water from the tailings system
and unplanned mechanical plant breakdowns.
Several new recovery bores were drilled and
the recycle water system returned to normal
operations by the end of July 2016.
An external review of LHM’s processing operations
was undertaken by a third-party consultant during
the year, resulting in a number of action items.
Such items include a heavy focus on initiatives
to
increase plant operating uptime, which
combined with other innovations already in the
implementation or design phase, were rolled out in
FY2016 with the remainder scheduled for FY2017.
KM
Construction of KM, with a 3.3Mlb U3O8 design
capacity, commenced in 2007 and, after a two-
year construction phase, the mine entered
its production ramp-up phase in CY2009. KM
continued to ramp-up its production volumes
through to July 2010. Commercial production
was declared from 1 July 2010. KM made its first
delivery of uranium to customers in December
2009. During FY2012, the operation made
substantial positive steps toward the design of
3.3Mlb U3O8 pa through a programme of plant
upgrades aimed at addressing bottlenecks. The
plant achieved record annual production totalling
2.963Mlb U3O8 for FY2013, 20% higher than
FY2012. The focus at KM turned to production
optimisation with the acid recycling (nano-
technology) project representing a key element.
The acid recovery plant was operational up to
the cessation of ore processing and continued to
improve beyond its design criteria.
On 7 February 2014, the Company announced
that it was suspending production at KM and
placing the mine on care and maintenance due
28
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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to the low uranium price and non-profitability of the
operation. The plant operated until all reagents in
the supply chain were consumed to the maximum
extent possible and the plant ceased production on
6 May 2014. After a transition period, during which
the site was made safe, the plant cleaned and all
remaining product dispatched to customers, the care
and maintenance period commenced on 26 May 2014.
During care and maintenance the project will be
maintained with an adequate component of staffing
to keep the project in good working order and to
preserve the critical aspects of Intellectual Property
and operational knowhow.
exchange gains/losses, restructure costs and other
income. As the mining industry is a capital-intensive
industry, capital expenditures, the level of gearing and
finance costs may have a significant impact on the
net profit of companies with similar operating results.
Therefore, the Company believes underlying EBITDA
may be helpful in analysing the operating results of
a mining company like itself. Although underlying
EBITDA is widely used in the mining industry as
a benchmark to reflect operating performance,
financing capability and liquidity, it is not regarded
as a measure of operating performance and liquidity
under IFRS. Refer to page 32 for reconciliation.
Underlying All-In Cash Expenditure per Pound
Underlying All-In Cash Expenditure = total cash cost
of production plus non-production costs, capital
expenditure, KM care & maintenance expenses,
corporate costs, exploration costs and debt servicing
costs and mandatory repayments. Underlying All-In
Cash Expenditure, which is a non-IFRS measure, is
widely used in the mining industry as a benchmark to
reflect operating performance. We use this measure
as a meaningful way to compare our performance from
period to period as it provides a more comprehensive
view of costs than the cash cost approach. Refer to
page 34 for reconciliation
In FY2016 activities focused on the water treatment
programme. Water treatment commenced using
filtration in mid-January 2016 with potable quality
water being discharged to the local mine water supply
dam. The renewal of the Water Discharge Licence was
received from the Malawi Government on 20 January
2016 and discharge off site was commenced in early
February 2016 when the on-site storages reached
threshold capacity. Following the highest February
rainfall on record, the lime water treatment plant was
brought back on line in late February to maximise the
volume of water able to be discharged from the site in
conformance with the site’s Water Management Plan
and Discharge Licence. The lime water treatment
plant ceased operation on 30 June 2016. The
membrane water treatment plant continues to treat
water. At 30 June 2016 water inventories had reduced
in the two major storage ponds and the dams are on
track to reach their pre-wet season targets and are
well below the levels for the same period last year.
NON-IFRS MEASURES
C1 cost of production
C1 cost of production = cost of production excluding
product distribution costs, sales royalties and
depreciation and amortisation before adjustment for
impairment. C1 cost, which is a non-IFRS measure,
is a widely used ‘industry standard’ term. We use
this measure as a meaningful way to compare our
performance from period to period. We believe
that, in addition to conventional measures prepared
in accordance with IFRS, certain investors use this
information to evaluate our performance. C1 cost
information (unaudited) has been extracted from the
financial statements. For an analysis of total cost of
sales refer to Note 12 to the financial statements.
Refer to page 33 for reconciliation.
Underlying EBITDA
The Company’s Earnings Before
Interest, Tax,
Depreciation and Amortisation (Underlying EBITDA)
represents profit before finance costs, taxation,
depreciation and amortisation, impairments, foreign
29
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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FINANCIAL RESULTS
YEAR ENDED 30 JUNE
Change from
2015 to 2016
2016
2015
2014
(5)%
(9)%
2%
(7)%
20%
(140)%
661%
28%
54%
64%
62%
4.763
4.899
5.037
5.367
8,173
8.665
37.75/lb
37.00/lb
37.95/lb
US$M
US$M
US$M
185.4
199.5
329.5
(152.5)
(189.7)
(332.9)
(19.2)
13.7
(8.0)
1.8
(173.9)
(241.4)
(122.0)
(267.8)
(11.5)
(101.0)
(61.7)
(65.1)
(331.7)
(338.4)
1.9
(133.5)
(368.8)
(336.5)
(7.1)
(18.9)
(32.7)
of stores and consumables at KM and US$0.8M (2015:
US$Nil) relating to the impairment of Summit’s office
building in Mount Isa. A change in the life of mine
plan, in order to preserve its integrity, has resulted
in a change in the timescale for processing the LHM
ore stockpiles. The stockpiles are now forecast to be
processed over the next three years, which due to the
lower forecast prices (compared to forecast prices in
future periods when the stockpiles were originally
planned to be processed) has resulted in the net
realisable value at 30 June 2016 being estimated as
US$Nil. Additionally in 2015 there was a US$229.1M
(US$180.8M after tax) (2016: US$Nil) impairment of
the Queensland exploration assets and a US$8.4M
(2016: US$Nil) impairment of the Bigrlyi exploration
asset.
Production volume (Mlb)
Sales volume (Mlb)
Realised sales price (US$/lb)
Revenue
Cost of Sales
Impairment – inventory, stores and consumables
Gross profit/(loss)
Impairments
Loss after tax attributable to members of the parent
Other comprehensive (loss)/income for the period, net of
tax
Total comprehensive loss attributable to the members of
the parent
Loss per share - basic & diluted (US cents)
References below to 2016 and 2015 are to the
equivalent year ended 30 June 2016 and 2015
respectively.
Revenue in 2016 decreased by 7%, mainly due to a
9% decrease in sales volume which has been partially
offset by a 2% increase in realised sales price. There
were no sales from KM (2015: 0.204Mlb, 2014:
3.475Mlb). The last of KM finished goods were sold in
December 2014.
Gross Profit in 2016 of US$13.7M is higher than the
gross profit in 2015 of US$1.8M due to a 20% decrease
in cost of sales and a 2% increase in realised sales
price, which was partially offset by a 9% decrease in
sales volume and a higher impairment of inventory at
LHM in 2016 of US$19.2M (2015: US$8.0M).
Impairments of US$173.9M were recognised in 2016
(2015: US$241.4M), comprising of a US$168.9M
impairment of LHM ore stockpiles, US$0.3M (2015:
US$1.0M) impairment of the aircraft ahead of its sale
in January 2016, US$1.5M (2015: US$2.9M) relating
to the impairment of the investment in DYL, US$2.4M
(2015: US$Nil) relating to an obsolescence write down
30
PALADIN ENERGY LTD | ANNUAL REPORT 2016
Loss after Tax Attributable to the Members of the
Parent for 2016 of US$122.0M is lower than the loss
of US$267.8M in 2015, and is predominantly due to
the impairment in 2015 of the Queensland and Bigrlyi
exploration assets (2016: US$Nil), an US$11.9M
increase in gross profit, a US$8.7M decrease in
corporate and marketing costs, a decrease in KM
care and maintenance expenses of US$3.3M, a
profit on convertible bonds buyback of US$2.2M
and a higher income tax benefit of US$83.4M (2015:
US$38.1M) which has arisen as a result of deferred
tax recognised on foreign exchange differences in
Namibia and the impairment of ore stockpiles which
have been partially offset by a US$168.9M impairment
of LHM ore stockpiles, restructure costs of US$5.3M
(2015: US$Nil) and write off of US$2.9M in facility
establishment costs relating to the repayment of the
entire US$56.4M remaining drawn under the LHM
syndicated loan facility (2015: US$0.5M).
Segment Information
The Namibian segment loss increased by US$50.4M,
as a result of a 9% decrease in sales volume and a
higher inventory impairment expense, which was
partially offset by a 2% increase in realised sales price,
a 20% decrease in total cost of sales and an income
tax benefit of US$84.2M. The Malawian segment loss
decreased by US$13.1M as a result of lower care and
maintenance costs. The exploration activities loss
has decreased by US$167.4M predominantly due to
the 2015 impairment of exploration assets referred
to above and the write off of all capitalised costs
(US$1.4M) relating to the surrender of the licence of
Spinifex Well. In the Unallocated portion, the Group
reflected the remaining Income Statement activities,
which for 2016 comprise mainly marketing, corporate,
finance and administration costs. The loss (costs) in
this area has decreased by US$25.6M through the
various cost reduction initiatives.
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Three Year Trend
Revenue has decreased by 44% since 2014, due to a
44% decrease in sales volume. Gross profit in 2016
of US$13.7M is a turnaround from a US$65.1M gross
loss in 2014 due to there being a lower impairment
of inventory in 2016 US$19.2M (2014: US$61.7M
impairment of inventory, stores and consumables
(KM US$40.7M and LHM US$21.0M). In addition,
the gross loss in 2014 included a gross loss before
impairments from KM of US$19.6M.
FOURTH QUARTER FINANCIAL RESULTS
THREE MONTHS ENDED 30 JUNE
Change %
2016
2015
2014
(16)%
2%
1.119
1.805
1.336
1.766
1.600
1.812
(16)%
34.91/lb
41.49/lb
38.24/lb
US$M
US$M
US$M
(15)%
17%
(140)%
(650)%
28%
58%
57%
59%
63.0
(55.8)
(19.2)
(12.0)
73.9
(67.5)
(8.0)
(1.6)
(172.9)
(239.7)
(82.7)
(195.9)
0.1
3.2
(82.6)
(192.7)
(4.8)
(11.7)
69.4
(70.1)
(36.8)
(37.5)
(3.8)
(63.5)
13.1
(50.4)
(6.2)
31
Production volume (Mlb)
Sales volume (Mlb)
Realised sales price (US$/lb)
Revenue
Cost of Sales
Impairment – inventory, stores and consumables
Gross loss
Impairments
Loss after tax attributable to members of the parent
Other comprehensive income/(loss) for the period, net of tax
Total comprehensive loss attributable to the members of the parent
Loss per share - basic & diluted (US cents)
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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References below to 2016 and 2015 are to the
equivalent three months ended 30 June 2016 and
2015 respectively.
Revenue decreased by 15%, due to a 16% decrease
in realised sales price, which was partially offset by
a 2% increase in sales volume. There were no sales
from KM (2015: Nil, 2014: 0.700Mlb). The last of KM
finished goods were sold in December 2014.
Gross Loss in 2016 of US$12.0M is higher than the
gross loss in 2015 of US$1.6M due to a 16% decrease
in realised sales price and higher impairment of
inventory in 2016 of US$19.2M (2015: US$8.0M).
The gross loss in 2014 included a gross loss before
impairments from KM of US$9.2M.
Impairments of US$172.9M were recognised in 2016
(2015: US$239.7M), comprising of US$168.9M of LHM
ore stockpiles discussed earlier, US$0.8M (2015:
US$1.2M) relating to the impairment of the investment
in DYL, US$2.4M (2015: US$Nil) relating to an
obsolescence write down of stores and consumables
at KM and US$0.8M (2015: US$Nil) relating to the
impairment of Summit’s office building in Mount
Isa. Additionally in 2015 there was a US$229.1M
(US$180.8M after tax) (2016: US$Nil) impairment of
UNDERLYING EBITDA
Loss before interest and tax
Depreciation and amortisation
Impairment loss reversed on sale of inventory
Impairment of inventory
Foreign exchange gain
Restructure costs
Impairment of assets
Impairment of ore stockpiles
Gain on disposal of investment
Gain on disposal of tenements
Increase in KM rehabilitation provision
Underlying EBITDA
the Queensland exploration assets, US$8.4M (2016:
US$Nil) impairment of the Bigrlyi exploration asset
and a US$1.0M (2016: US$Nil) impairment of the
aircraft.
Loss after Tax Attributable to the Members of the
Parent for 2016 of US$82.7M is lower than the loss
of US$195.9M in 2015, and is predominantly due to
the impairment in 2015 of the Queensland and Bigrlyi
exploration assets (2016: US$Nil) which has been
partially offset by a US$168.9M impairment of LHM
ore stockpiles discussed earlier.
Three Year Trend
Revenue has decreased by 9% since 2014 due to a
9% decrease in realised sales price. Gross Loss in
2016 is US$25.5M lower than the gross loss in 2014
of US$37.5M. The gross loss in 2014 included a gross
loss from KM of US$9.2M.
Note
YEAR ENDED 30 JUNE
2016
US$M
2015
US$M
(179.7)
(281.2)
12
12
12
12
12
12
12
12
23.2
(7.9)
19.2
(9.2)
5.3
5.0
168.9
-
-
-
32.3
(24.9)
8.0
(4.3)
-
242.8
-
(0.6)
(0.6)
7.6
24.8
(20.9)
Underlying EBITDA has improved by US$45.7M for the year ended 30 June 2016.
32
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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V
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R
L
A
C
N
A
N
F
I
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I
I
S
S
Y
L
A
N
A
D
N
A
N
O
S
S
U
C
S
D
T
N
E
M
E
G
A
N
A
M
I
ANALYSIS OF REALISED SALES PRICE AND SALES & PRODUCTION VOLUMES
YEAR ENDED 30 JUNE
%
Change
2016
US$
2015
US$
LHM realised uranium sales price
2%
US$37.75/lb
US$37.17/lb
KM realised uranium sales price
(100)%
US$32.77/lb
US$32.77/lb
Group realised uranium sales price
2%
US$37.75/lb
US$37.00/lb
LHM sales volume
KM sales volume
Total sales volume
LHM production
Mlb U3O8
Mlb U3O8
4.899
-
4.899
4.763
5.164
0.203
5.367
5.037
(5)%
(100)%
(9)%
(5)%
The average realised uranium sales price for the year ended 30 June 2016 was US$37.75/lb U3O8 compared to
the TradeTech weekly spot price average for the year of US$33.19/lb U3O8.
RECONCILIATION OF C1 COST OF PRODUCTION TO COST OF GOODS SOLD
YEAR ENDED 30 JUNE 2016
YEAR ENDED 30 JUNE 2015
LHM
KM
TOTAL
LHM
KM
TOTAL
Volume Produced (Mlb)
4.763
Cost of Production/lb (C1)
US$25.88/lb
-
-
4.763
5.037
-
US$29.07/lb
-
-
5.037
-
Cost of Production (C1)
Depreciation & amortisation
Production distribution costs
Royalties
Inventory movement
Other
Cost of goods sold
US$M
US$M
US$M
US$M
US$M
US$M
123.2
22.2
3.4
5.7
(2.0)
-
152.5
-
-
-
-
-
-
-
123.2
22.2
3.4
5.7
(2.0)
-
146.4
24.0
5.7
5.8
1.7
(0.7)
-
-
-
-
6.8
-
146.4
24.0
5.7
5.8
8.5
(0.7)
152.5
182.9
6.8
189.7
The C1 cost of production for the year for LHM decreased by 11% to US$25.88/lb U3O8 (2015: US$29.07/lb
U3O8); and total C1 cost of production for the year decreased by 16%, to US$123.2M. Production ceased at
KM on 6 May 2014.
33
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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S
Y
L
A
N
A
D
N
A
N
O
S
S
U
C
S
D
T
N
E
M
E
G
A
N
A
M
I
W
E
I
V
E
R
L
A
C
N
A
N
F
I
I
ANALYSIS OF UNDERLYING ALL-IN CASH EXPENDITURE PER POUND OF URANIUM PRODUCTION
%
Change
YEAR ENDED 30 JUNE
2016
US$/lb
2015
US$/lb
LHM – C1 cost of production
11%
Less movement in ore stockpiles
Royalties
Product distribution costs
LHM – total cash cost of production
21%
Commercial & administration non-production
Social development – non-production
Capex
25.88
(1.50)
1.20
0.72
26.30
1.04
0.06
0.71
29.07
1.74
1.16
1.14
33.11
1.34
0.08
2.02
LHM – total cash cost after capex
23%
28.11
36.55
KM – care & maintenance expenses
Corporate costs
Exploration costs
Debt servicing costs & mandatory repayments
Underlying all-in cash expenditure
24%
2.08
1.25
0.66
6.65
38.75
3.17
2.32
1.06
7.65
50.75
Underlying all-in cash expenditure per pound of uranium production for the year ended 30 June 2016 was
US$38.75/lb, a decrease of 24% compared to the year ended 30 June 2015 of US$50.75/lb.
ANALYSIS OF ADMINISTRATION, MARKETING AND NON-PRODUCTION COSTS
YEAR ENDED 30 JUNE
%
Change
2016
US$M
2015
US$M
Total
16%
(16.3)
(19.3)
Costs for the year ended 30 June 2016 decreased by US$3.0M, due to a US$8.7M decrease in corporate and
marketing costs which was partially offset by restructure costs of US$5.3M.
34
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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L
A
C
N
A
N
F
I
I
I
I
S
S
Y
L
A
N
A
D
N
A
N
O
S
S
U
C
S
D
T
N
E
M
E
G
A
N
A
M
I
SUMMARY OF QUARTERLY FINANCIAL RESULTS
2016
2016
2015
2015
Jun Qtr
Mar Qtr
Dec Qtr
Sep Qtr
Production U3O8
C1 cost of production
Mlb
1.119
1.302
1.259
1.083
US$/lb
26.60
24.13
25.38
27.82
Underlying all-in cash expenditure
US$/lb
38.56
31.60
39.58
46.25
Total revenues
Sales volume
US$M
63.0
20.8
64.6
37.0
Mlb
1.805
0.595
1.699
0.800
Realised uranium sales price
US$/lb
34.91
34.67
37.90
46.12
Impairments
US$M
(172.9)
(0.3)
Loss after tax attributable to members
US$M
(82.7)
(15.1)
Basic and diluted loss per share
Underlying EBITDA
US cents
US$M
(4.8)
8.6
(0.9)
(0.8)
(0.7)
(7.8)
(0.5)
10.6
-
(16.4)
(1.0)
6.4
2015
2015
2014
2014
Jun Qtr
Mar Qtr
Dec Qtr
Sep Qtr
Production U3O8*
Mlb
1.336
1.234
1.377
1.090
C1 cost of production*
US$/lb
26.03
29.42
28.58
33.03
Underlying all-in cash expenditure
US$/lb
45.48
46.87
48.91
63.86
Total revenues
Sales volume
US$M
73.9
17.1
70.4
39.3
Mlb
1.766
0.440
1.911
1.250
Realised uranium sales price
US$/lb
41.49
38.03
36.43
31.16
Impairments
US$M
(247.7)
-
(1.7)
-
Loss after tax attributable to members
US$M
(195.9)
(12.6)
(20.5)
(38.8)
Basic and diluted loss per share
US cents
(11.7)
Underlying EBITDA
US$M
7.6
(0.8)
(6.2)
(1.7)
(7.2)
(3.8)
(15.1)
* LHM production volumes and unit C1 cost of production for the quarters ended December 2014 and September
2014 include an adjustment to in-circuit inventory relating to leached uranium within the process circuit.
The unit C1 cost of production for LHM increased 2% over the last year, from US$26.03/lb in the June 2015
quarter to US$26.60/lb in the June 2016 quarter.
The increase in C1 cash cost of production was largely due to issues with performance of water return sumps
from LHM tailings storage facility no.3 (TSF3). This raised C1 cash cost of production due to: (i) the loss of
approximately 150,000lb of production and the amortisation of fixed cost elements of production cost over lower
overall volumes; and (ii) an additional US$0.89/lb in C1 cash cost directly attributable to the cost of purchasing
35
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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A
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S
U
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D
T
N
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E
G
A
N
A
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E
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V
E
R
L
A
C
N
A
N
F
I
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extra water externally and
increased soda ash
consumption due to the reduction in water recovery
from TSF3 which is a major source of soda ash to
the circuit. The TSF3 return water issue was largely
resolved by 31 July 2016 by drilling and preparation
of new return water wells. It is not expected to have a
material impact on production going forward.
Total revenue for the quarter ended June 2016 was
lower than the comparative quarter, due to lower
realised uranium prices, which was partially offset by
higher sales volumes. Total revenue for the quarter
ended March 2016 was higher than the comparative
quarter, due to higher sales volumes which was
partially offset by lower realised uranium prices.
Total revenue for the quarters ended December
2015 and September 2015 were lower than the
comparative quarters, due to lower sales volumes
which was partially offset by higher realised uranium
prices. Additionally, KM is on care and maintenance
with production ceasing on 6 May 2014.
Certain Balance Sheet items are set out below:
SUMMARISED STATEMENT OF FINANCIAL POSITION
YEAR ENDED 30 JUNE
2016
US$M
2015
US$M
2014
US$M
59.2
35.9
791.1
429.2
493.4
48.9
183.7
231.6
88.8
238.3
1,100.0
1,565.7
534.5
859.3
198.3
725.6
1,049.1
432.4
offset by an increase in cash and debtors. Malawian
assets have decreased predominantly as a result of
a decrease in cash and a stores and consumables
obsolescence write off. The Exploration segment
assets have remained stable as a result of a decrease
in the US dollar value of exploration assets, due to the
weakening of the Canadian dollar currency against
the US dollar, which was offset by the acquisition
of the Carley Bore Uranium Deposit in Western
Australia and capitalised exploration expenditure. In
the Unallocated portion, assets decreased primarily
due to a decrease in cash and cash equivalents,
which included the repurchase of US$62.0M of April
2017 Convertible Bonds for US$56.4M (excluding
accrued interest), the US$60.9M repayment of the
LHM syndicated loan facility and restructure costs of
US$5.3M.
LIQUIDITY AND CAPITAL RESOURCES
of
source
principal
The Group’s
liquidity
as at 30 June 2016, was cash of US$59.2M
(30 June 2015: US$183.7M). Any cash available
to be invested is held with Australian banks with a
minimum AA- Standard & Poor’s credit rating over a
range of maturities. Of this, US$51.2M is held in US
dollars.
Cash and cash equivalents
Inventories
Total assets
Interest bearing loans and borrowings
Total long-term liabilities
Net Assets
Cash and Cash Equivalents have decreased by
US$124.5M, mainly as a result of the repurchase
of US$62.0M of April 2017 Convertible Bonds for
US$56.4M (excluding accrued interest), repayment
of US$60.9M under the LHM syndicated loan facility,
US$5.2M distribution to CNNC by way of repayment
of loans assigned to CNNC, interest paid of US$27.8M
and restructure costs of US$5.3M.
Inventories have
by US$195.7M,
decreased
predominantly due to the US$188.1M of impairments
discussed earlier and a decrease in the number of
pounds of finished goods at 30 June 2016 as LHM
produced 4.763Mlb and sold 4.899Mlb during the year.
Interest Bearing Loans and Borrowings have
decreased by US$105.3M, primarily as a result of the
repurchase of US$62.0M of April 2017 Convertible
Bonds for US$56.4M, repayment of US$60.9M under
the LHM syndicated loan facility, US$5.2M distribution
to CNNC by way of repayment of intercompany loans
assigned to CNNC, partially offset by the non-cash
accretion of the convertible bonds of US$13.5M.
Segment Assets: Namibian assets have decreased
predominantly due to a decrease in inventory and
property, plant and equipment which was partially
36
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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L
A
C
N
A
N
F
I
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I
I
S
S
Y
L
A
N
A
D
N
A
N
O
S
S
U
C
S
D
T
N
E
M
E
G
A
N
A
M
I
Net Cash Inflow from Operating Activities was
US$4.3M in 2016 (2015: outflow US$24.7M), primarily
due to receipts from customers of US$186.0M (2015:
US$215.4M) which were partially offset by payments
to suppliers and employees of US$153.8M (2015:
US$210.9M) and net interest paid of US$27.3M (2015:
US$28.8M).
Net Cash Outflow from Investing Activities was
US$5.3M in 2016 and is due primarily to plant and
equipment acquisitions of US$3.8M at LHM, as well
as capitalised exploration expenditure of US$4.2M
(including US$1.2M for the acquisition of the Carley
Bore Uranium Deposit). This has been partially offset
by US$2.5M received for the sale of the aircraft and
US$0.2M received from the sale of investments. The
net cash outflow of US$15.6M in 2015 was primarily
due to plant and equipment acquisitions of US$11.5M,
including, at LHM, the BRP, nano-filtration equipment
and spiral heat exchangers, as well as capitalised
exploration expenditure of US$4.2M.
Net Cash Outflow from Financing Activities of
US$122.5M in 2016 is attributable to the repurchase
of US$62M April 2017 Convertible Bonds
for
US$56.4M (excluding accrued interest), repayment of
US$60.9M under the LHM syndicated loan facility and
US$5.2M distribution to CNNC by way of repayment
of intercompany loans assigned to CNNC. The net
inflow in 2015 of US$137.6M was attributable to the
balance of the proceeds received from the sale of
a 25% interest in LHM of US$170M, proceeds from
the entitlement offer of US$119.7M and the share
placement to HOPU of US$52.7M, and from the
convertible bond issue of US$150M, which were
partially offset by the repurchase of the US$300M
November 2015 convertible bond, a US$39.9M
repayment of the LHM project finance and syndicated
loan facility, US$1.5M in syndicated loan facility
establishment costs, US$3.0M in costs attributable
to sale of the non-controlling interest in LHM,
US$6.2M in equity capital raising costs and US$4.2M
in convertible bond raising costs.
GOING CONCERN
As at 30 June 2016, the Group had a net current
asset deficit of US$139.9M (30 June 2015: surplus
US$231.8M), including cash on hand of US$59.2M (30
June 2015: US$183.7M). Included within this cash on
hand is US$0.6M (30 June 2015: US$31.2M), which is
restricted for use in respect of supplier guarantees
provided by LHM (30 June 2015: restricted for use
in respect of the LHM syndicated loan facility and
supplier guarantees provided by LHM).
The LHM syndicated loan facility was repaid in full on
31 March 2016.
Repayment obligations during the next twelve months
to 30 June 2017 in respect of interest bearing loans
and borrowings are summarised as follows:
• Interest payments of US$23.2M for the 2012 (due
2017) and 2015 (due 2020) unsecured convertible
bonds.
• US$212M principal repayment of 2012
unsecured convertible bonds maturing on 30
April 2017.
The ability of the Group to pay its debts as and when
they fall due and thus to continue as a going concern is
dependent upon the achievement of certain strategic
and financing initiatives, as outlined below.
The Directors are satisfied that it is appropriate to
prepare the financial statements on a going concern
basis, due to:
• The following strategic initiatives announced on
21 July 2016:
◦ A non-binding terms sheet signed with CNNC
Overseas Uranium Holdings Ltd (COUH) (the
existing 25% minority shareholder in LHM),
to sell a 24% interest in the Langer Heinrich
Mine. The sale is expected to raise US$175M
in cash for the Company with the Company
working towards a formal close of the
transaction in the fourth quarter of the 2016
calendar year.
◦ A binding terms sheet signed with MGT
Resources Limited (“MGT”) for sale of up
to a 75% interest in the Company’s 100%
owned Manyingee project. On closing of the
transaction, MGT will acquire a 30% initial
interest in Manyingee for US$10M cash
with an option to acquire an additional 45%
interest within twelve months for US$20M
cash. The transaction is conditional on
definitive documentation and a vote of MGT’s
shareholders expected to be concluded in the
fourth quarter of CY2016.
• The Company’s history of successful capital
raisings and other financing arrangements.
Should the Group not achieve the matters set out
above, there is uncertainty whether the Group would
continue as a going concern and therefore whether it
would realise its assets and extinguish its liabilities
in the normal course of business and at the amounts
stated in the financial report. The financial report does
not include adjustments relating to the recoverability
or classification of the recorded assets amounts nor
to the amounts or classification of liabilities that
might be necessary should the Group not be able to
continue as a going concern.
37
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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S
S
Y
L
A
N
A
D
N
A
N
O
S
S
U
C
S
D
T
N
E
M
E
G
A
N
A
M
I
W
E
I
V
E
R
L
A
C
N
A
N
F
I
I
The following is a summary of the Group’s outstanding commitments as at 30 June 2016:
Payments due by period
Total
US$M
Less than 1 yr
US$M
1 to 5yrs
US$M
5yrs+ or
Unknown
US$M
Tenements
Operating leases
Mining, transport and reagents
Manyingee acquisition costs
Total commitments
20.3
1.5
10.8
0.6
33.2
0.9
0.3
10.8
-
12.0
11.9
1.2
-
-
13.1
7.5
-
-
0.6
8.1
In relation to the Manyingee Uranium Project, the acquisition terms provide for a payment of A$0.75M
(US$0.56M) by the Group to the vendors when all project development approvals are obtained.
The Group has no other material off balance sheet arrangements.
OUTSTANDING SHARE INFORMATION
As at 24 August 2016, Paladin had 1,712,843,812 fully paid ordinary shares issued. The following table sets out
the fully paid ordinary shares and those issuable under the Group Employee Performance Share Rights Plan
and in relation to the Convertible Bonds:
As at 24 August 2016
Ordinary shares
Issuable under Employee Performance Share Rights Plan
Issuable under Performance Share Rights Plan (SARs)*
Issuable under Executive Share Option Plan
Issuable in relation to the US$212M Convertible Bonds
Issuable in relation to the US$150M Convertible Bonds
Total
Number
1,712,843,812
-
-
3,000,000
115,846,995
421,348,315
2,253,039,122
*The number of ordinary shares ultimately issuable upon vesting of the Share Appreciation Rights will vary
as the number of ordinary shares to be issued is based upon Paladin’s relative share price growth over the
relevant vesting periods. The number disclosed in the table above is based on the closing share price at 23
August 2016 of A$0.175.
38
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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E
R
L
A
C
N
A
N
F
I
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I
I
S
S
Y
L
A
N
A
D
N
A
N
O
S
S
U
C
S
D
T
N
E
M
E
G
A
N
A
M
I
The Group’s treasury function is responsible for the
Group’s capital management, including management
of the long-term debt and cash as part of the capital
structure. This involves the use of corporate forecasting
models which enable analysis of the Group’s financial
position, including cash flow forecasts, to determine
the future capital management requirements. To
ensure sufficient funding for operational expenditure
and growth activities, a range of assumptions are
modelled so as to provide the flexibility in determining
the Group’s optimal future capital structure.
OTHER RISKS AND UNCERTAINTIES
Risk Factors
The Group is subject to other risks that are outlined
in the Annual Information Form 51-102F2, which is
available on SEDAR at sedar.com
TRANSACTIONS WITH RELATED PARTIES
During the year ended 30 June 2016, no payments
were made to Director related entities. Directors of
the Company receive fees as outlined in the Company’s
management circular forming part of the Company’s
Notice of AGM. The only related party transactions
are with Directors and Key Management Personnel.
Refer to Note 27. Details of material controlled
entities are set out in Note 32.
CRITICAL ACCOUNTING ESTIMATES
The preparation of the Financial Report requires
management to make estimates and assumptions
that affect the reported amount of assets and liabilities
and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported
amount of revenues and expenses during the
reporting period. Significant areas requiring the use
of management estimates relate to the determination
of the following: carrying value or impairment of
inventories, financial investments, property, plant
and equipment, intangibles, mineral properties and
deferred tax assets; carrying value of rehabilitation,
mine closure, sales contracts provisions and deferred
tax liabilities; and the calculation of share-based
payments.
FINANCIAL INSTRUMENTS
At 30 June 2016, the Group has exposure to interest
rate risk, which is the risk that the Group’s financial
position will be adversely affected by movements in
interest rates that will increase the cost of floating
rate project finance debt or opportunity losses that
may arise on fixed rate convertible bonds in a falling
interest rate environment. Interest rate risk on cash
and short-term deposits is not considered to be a
material risk due to the historically low US dollar
interest rates of these financial instruments.
The Group has no significant monetary foreign
currency assets or liabilities apart from Namibian
Dollar cash, receivables, payables and provisions and
Australian dollar cash and, payables and Canadian
payables.
The Group currently does not engage in any hedging
or derivative transactions to manage uranium price
movements, interest rate or foreign currency risks.
The Group’s credit risk is the risk that a contracting
entity will not complete its obligation under a
financial instrument that will result in a financial
loss to the Group. The carrying amount of financial
assets represents the maximum credit exposure.
The Group trades only with recognised, credit worthy
third parties. In addition, receivable balances are
monitored on an ongoing basis with the result that
the Group’s exposure to bad debts is not material.
39
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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Y
L
A
N
A
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N
A
N
O
S
S
U
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S
D
T
N
E
M
E
G
A
N
A
M
I
W
E
I
V
E
R
L
A
C
N
A
N
F
I
I
Strategic Process Achieves Agreements to Raise Over
US$200M
On 21 July 2016 and 29 July 2016, the Company
announced the outcome of its strategic initiatives
process with respect to partnerships, strategic
investment, funding and corporate transactions, with
the result being two planned transactions to raise
in excess of US$200M. One pertains to a proposed
sale of 24% of Langer Heinrich Mine (LHM) and one
pertains to a potential sale of up to 75% of Manyingee
as set out below.
Sale of 24% of LHM
Paladin currently owns 75% of LHM and has signed
a non-binding terms sheet with CNNC Overseas
Uranium Holdings Ltd (COUH) (the existing 25%
minority shareholder in LHM), to sell it a 24%
interest in LHM. If it proceeds on its current terms,
the sale is expected to raise US$175M cash for
the Company and be accompanied by long-term
arrangements for uranium off-take. The proposed
transaction is subject to the parties negotiating
and executing definitive documentation, including:
sale and purchase agreement; shareholders
agreement; and documentation for the uranium off-
take arrangements. We have been advised by COUH
that any definitive agreement would also require
the approval of the board of COUH’s ultimate parent
company and third-party government and regulatory
approvals. Such approvals would include China
regulatory approvals customary for an international
transaction of the proposed size. Paladin is working
towards a formal close of the transaction in fourth
quarter of 2016 calendar year. Other than as set out
in this announcement, the other key terms of this
proposed transaction remain confidential.
On completion of the transaction, Paladin will
continue to hold 51% of LHM and be the operator.
DISCLOSURE CONTROLS
The Group has applied its Disclosure Control Policy to
the preparation of the Consolidated Financial Report
for year ended 30 June 2016, associated Management
Discussion and Analysis and Report to Shareholders.
An evaluation of the Group’s disclosure controls and
procedures used has been undertaken and concluded
that the disclosure controls and procedures were
effective.
INTERNAL CONTROLS
The Group has designed appropriate Internal Controls
over Financial Reporting (ICFR) and ensured that
these were in place for the year ended 30 June 2016.
An evaluation of the design of ICFR has concluded
that it is adequate to prevent a material misstatement
of the Group’s Consolidated Financial Report as at 30
June 2016.
During the year, the Group continued to have an
internal audit function externally contracted to Deloitte
Touche Tohmatsu. Internal audit reports and follow-
up reviews were completed during the year and the
Group continues to address their recommendations.
The resultant changes to the ICFR have improved and
will continue to improve the Group’s framework of
internal control in relation to financial reporting.
CHANGES IN ACCOUNTING POLICIES
The Group has adopted all new and amended
Australian Accounting Standards
and AASB
Interpretations effective from 1 July 2015. The nature
and impact of each new standard and amendment is
described in Note 3 – Basis of Preparation.
SUBSEQUENT EVENTS
Other than disclosed below, since 30 June 2016,
the Directors are not aware of any other matter
or circumstance not otherwise dealt with in this
report, that has significantly or may significantly
affect the operations of the Group, the results of
those operations or the state of affairs of the Group
in subsequent periods with the exception of the
following, the financial effects of which have not been
provided for in the 30 June 2016 Financial Report:
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Sale of 75% of Manyingee
Paladin currently owns 100% of Manyingee and has
signed a binding terms sheet with MGT Resources
Limited (MGT) for it to make a two-stage acquisition
of 75% of Manyingee (excluding Carley Bore).
On closing of the transaction, MGT will acquire a 30%
initial interest in Manyingee for US$10M cash and
will form a joint-venture over the project with Paladin
(Manyingee JV). MGT will then have an option to
acquire an additional 45% of Manyingee JV from
Paladin for US$20M cash, exercisable for 12-months
following Manyingee JV’s preparation of a plan to
conduct a field leach trial for uranium extraction by
in-situ recovery method.
Under the terms of the agreement, MGT will issue
Paladin options to subscribe for new shares equivalent
to 5% of MGT’s shares outstanding for a period of
12-months from closing of the transaction at A$0.06
per share; and options to subscribe for new shares
equivalent to 5% of MGT’s shares outstanding for a
period of 24-months from closing of the transaction
at A$0.08 per share.
Paladin will issue MGT options to subscribe for
new shares equivalent to 2% of Paladin’s shares
outstanding for a period of 12-months from closing
of the transaction at A$0.35 per share; and options to
subscribe for new shares equivalent to 2% of Paladin’s
shares outstanding for a period of 24-months from
closing of the transaction at A$0.45 per share.
transaction
The
is conditional on definitive
documentation and a vote of MGT’s shareholders.
MGT’s directors have irrevocably agreed to vote in
favour.
41
PALADIN ENERGY LTD | ANNUAL REPORT 2016
SUSTAINABLE DEVELOPMENT
Paladin is committed to the goal of sustainable development, which is reflected in its corporate
values. The Company’s values include promoting the creation of shared wealth, becoming a
major uranium supplier, operating at global best practice, safety and environmental stewardship,
employee welfare and recognition, and contributing and responding to the attitudes and
expectations of local communities in the countries in which Paladin operates. The Company is
cognisant of the extra diligence that is required for those in the uranium industry. It has therefore
established an in-house team with extensive knowledge about uranium and the stringent
requirements related to the commodity. The Company emphasises acting with integrity, honesty
and cultural sensitivity in all of its dealings. In support of this commitment, Paladin applies and
adheres to established and internationally recognised principles of sustainable development for
all of its global activities.
In implementing its sustainable development
programme, Paladin aims to achieve a balance
between economic, environmental and social
needs in all phases of its projects, and takes
into consideration its employees, communities,
shareholders and other key stakeholders.
Paladin ensures that its high standards are not
compromised despite the difficult economic
climate that it is currently operating in.
To deliver on Paladin’s commitment
to
sustainable development, the Company has
a Sustainability Committee whose role is to
provide the Board with an overview of Paladin’s
performance in the areas of health, safety,
radiation, environment, social responsibility
and sustainable development, and to offer
advice and recommendations where significant
The
sustainability related
issues arise.
Sustainability Committee comprises
three
members: the Chairman of Paladin’s Board,
Paladin’s CEO and a Non-executive independent
Director who is also the Chairman of that
Committee.
CORPORATE SUSTAINABILITY
REPORTING
Paladin produced its fourth Sustainability Report
(FY2015), which can be found on the Company’s
website www.paladinenergy.com.au.
Paladin is continuing the data collection process
from LHM and KM for input into the FY2016
Sustainability Report. Data is collected specifically
to meet the reporting guidelines of the Global
Reporting Initiative (GRI) Framework applying
the G4 requirements. The GRI Sustainability
Reporting Guidelines provide principles for and
guidance on defining report content. Paladin’s
focus is on those indicators that are considered
material to the Company and have therefore
conducted materiality assessments to define the
reporting parameters. To allow sufficient time
for comprehensive data collection, assessment
and reporting for the FY2016 period, the report is
expected to be available on the website towards
the end of CY2016.
The following discussion provides an overview
of Paladin’s environmental management. More
detail on environmental performance, specific
management and quantitative data for the
reporting period will be provided in the 2016
Sustainability Report.
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ENVIRONMENT
Our Commitment
Paladin is committed to ensuring that effective
is planned and
environmental management
undertaken for all aspects of its operations. The
approach to environmental management is guided
by Paladin’s Environmental Policy, which promotes a
standard of excellence for environmental performance
across its operations. The key points of the Policy
include:
• complying with applicable environmental
legislation;
• ensuring operations have developed an
environmental management system;
• identifying, assessing and managing
environmental risks;
• implementing and assigning accountabilities for
standards, guidelines and procedures;
• striving to achieve continuous improvement in
environmental performance;
• preventing and mitigating pollution;
• communicating environmental responsibility to
employees and contractors;
• effective consultation with stakeholders on
environmental issues;
• inspections and audits of environmental
performance; and
• reporting on environmental performance.
Paladin has established Corporate Sustainable
Development Standards for all of its operational
subsidiaries. Operational compliance with Paladin’s
Standards forms part of the Corporate Environmental
Audit Programme.
An Operational Environmental Management Plan
(EMP) for LHM will be submitted at the end of August
2016, when the Annual Environmental Feedback
is submitted for the year ended 30 June 2016. The
Operational EMP is regularly updated and revised as
part of the site’s continual improvement process. A
care and maintenance EMP has been submitted and
approved by the Malawian Government and is being
adhered to during the care and maintenance phase.
Environment Regulatory Reporting
Regulatory reporting for LHM
Both LHUPL and PAL prepare various environmental
reports for the Namibian and Malawi Governments,
is
respectively.
conducted monthly and annually for water aspects,
and, annually for general environmental reporting.
Regulatory environmental reporting at KM
is
conducted on a quarterly basis for data provision and
for regulatory compliance, and on an annual basis for
general environmental reporting.
Inspection and Audit Programme
to establish and
The Paladin Environmental Audit Standard requires
operating sites
implement
environmental inspection and audit programmes to
ensure that the environmental performance of the
operations is reviewed, audited and reported to the
Board. These audits are undertaken to ensure that
there is not only compliance with regulatory and
Paladin requirements, but also with the World Bank
Equator Principles and other industry standards,
particularly those specified for the uranium industry.
During the reporting period, inspections and audits
were undertaken at both LHM and KM, with the
findings documented and actions developed to
rectify and manage identified issues. Corporate
Environmental Audit Reports are provided to the
Paladin Energy Board Sustainability Committee.
Environmental Management System
Energy
Within the Paladin Environmental Management
System (EMS) Standard, each operating site is
required to develop and implement an EMS that is
consistent with the requirements of ISO14001:2004.
The EMS for LHM was re-certified in April 2015
for a period of three years. The development and
implementation of an EMS at KM is continuing for the
care and maintenance phase.
Energy requirements at Paladin’s operations are
principally in the form of fuel for vehicles and
electricity generation. Electricity at LHM is purchased
from the Namibian grid, which can be supplemented,
if necessary, with power generated from the on-site
power plant. Power for the care and maintenance
activities at KM is generated by a diesel-fuelled
power station. Fuel usage at both sites for vehicles
comprises diesel and minor amounts of petrol.
Emulsion is used at LHM as an explosive for blasting.
The volume of the fuels used and the energy purchased
during the reporting period is being collated and will
be reported in the 2016 Sustainability Report.
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
Water
Air Emissions
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Paladin applies a Standard for Water Use and Water
Quality at its operations to ensure that there is
efficient, safe and sustainable use of water and that
water resources and ecosystems around its sites
are protected. Both LHM and KM have implemented
water management strategies and maintain whole-
of-site water balances to ensure that the Company’s
objectives around water usage, supply and resource
protection are achieved. Reuse and recycling of
water is maximised as much as possible at Paladin’s
operations.
A specific care and maintenance water management
strategy has been developed for KM which focuses on
reducing stored water in the water collection ponds
to ensure sufficient capacity remains in the ponds to
capture rainfall runoff from the mining and processing
areas of disturbance. This water management
strategy is reviewed periodically. Water from the
ponds is being treated in an on-site water treatment
plant to drinking water standards and a quality
suitable for discharge. Treated water is discharged
into the local river under licence conditions.
comprehensive
groundwater
surface
A
monitoring programme is undertaken at LHM and
KM. All water monitoring data are collated in annual
water reports that consolidate and summarise the
key water aspects across Paladin’s operations.
and
Water aspects as per the GRI indicator requirements
will be presented in the 2016 Sustainability Report.
Land Use, Biodiversity and Rehabilitation
Land use and understanding land values are important
components of sustainable development. Prior to
disturbance for project development or expansions,
studies are conducted to determine land use and
land values including for biodiversity, ecological,
social and cultural heritage. Land clearing approval
processes are in place at all Paladin sites with the
aim of minimising the area of disturbance, and
ensuring areas are surveyed to assess impacts prior
to clearing. Progressive rehabilitation of disturbed
areas is undertaken where practicable at all of
Paladin’s exploration sites and mining operations.
Paladin’s aim is to conserve biodiversity by obtaining
knowledge of the ecosystems within the regions in
which the Company operates, and to ensure that
impacts on biodiversity are minimised and managed.
Data on land use and biodiversity management
aspects is being collated from LHM and KM and will
be presented in the 2016 Sustainability Report.
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Paladin has an Air Quality Standard in place with
the intent to ensure that air pollutant emissions
generated by any of Paladin’s activities are identified,
impacts assessed and management measures
established and implemented. The common air
pollutants generated by Paladin activities which
have the potential to impact on human health and/
or the environment include; radon, particulate matter
(dust), sulphur oxides (SOX); carbon oxides (CO and
CO2), and nitrogen oxides (NOx).
Dust generation during exploration activities and at
the mine sites is suppressed using water sprays to
enable a safe working environment and to minimise
impacts on
the environment and surrounding
communities. Fugitive dust level monitoring is
conducted at both the LHM and KM sites and the
results are collated in Annual Environmental Reports
and submitted to the respective Governments.
SOX emissions are generated at the operations by the
burning of fuel for heating and power generation, and
vehicle emissions. The sulphuric acid plant at KM
has been mothballed whilst the site is on care and
maintenance. Ambient ground level concentrations
of SO2 are monitored around KM. Monitoring data
are analysed and the results reported in the Annual
Environmental Report submitted to the Malawi
Government.
The radon inhalation pathway has been identified
in many studies as the main contributor to public
radiation dose received from a practice such as
uranium mining and milling. This is particularly
true for permanent habitation occurring on or in
the immediate vicinity of a mine site. At KM radon
concentrations in the air are monitored at 10 locations
both on and off site and to allow calculation of dose to
the public. Passive radon gas monitors (PRGM) are
positioned around the mine site and at Kayelekera
Village. Five polycarbonate track etch radon monitors
are deployed at each monitoring location for a period
of three months, after which the radon monitors are
collected and returned to the external radiological
laboratory for analyses
The principal direct greenhouse gas emissions from
Paladin’s operations are those from fuel burning
for power generation, boilers, burners, emulsions
for explosives and automotive exhausts. The key
indirect greenhouse gas emissions relate to the
energy purchased from the Namibian electricity
grid to power the LHM operations. Greenhouse gas
emissions data are collected from the operating
sites and will be calculated as Carbon Dioxide (CO2)
equivalent emissions. Paladin’s current Australian
activities are confined to Paladin’s limited exploration
activities and the corporate Perth office.
PALADIN ENERGY LTD | ANNUAL REPORT 2016
Waste Rock
Non-Mineral Waste
Overburden is removed to allow access to the
uranium ore in the mine pit and placed in dumps.
Waste rock dump location, design and placement are
important to the Company in terms of environmental
considerations and cost. The main objectives for the
final landform of the dumps are to be stable, blend
in with the surrounding landscape and be capable of
supporting a self-sustaining ecosystem.
Studies have been conducted at both mine sites
to determine the best locations for the waste rock
dumps, taking haulage costs and environmental
aspects into consideration. The design of the dumps
and the placement of waste rock also considers
other factors such as the physical and geochemical
properties of the material placed in the dumps.
Tailings
Tailings and tailings storage facility (TSF) management
continues to be a high priority at the LHM operational
site and also at KM whilst in care and maintenance.
Paladin applies measures to ensure that its TSFs
are appropriately designed, operated and managed
according to acceptable standards. Specialist TSF
engineers have designed the TSFs at both LHM and
KM. The specialists have also defined the operational
practice and management to ensure that the tailings
and TSFs are appropriately managed and any potential
environmental impacts from the tailings or the facility
are minimised. Independent experts conduct peer
reviews of the design, construction and operations of
the TSFs on an ongoing basis.
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Non-mineral waste includes typical general wastes,
sewage and some water that may be considered
hazardous. The LHM and KM operations both have
waste management programmes and procedures
in place with the aim of applying the principles of
reduce, reuse and recycle wherever possible. At LHM,
domestic solid wastes are separated into recyclable
and non-recyclable. Recyclable domestic waste is
collected and taken to off-site recycling depots whilst
the non-recyclables are delivered to the municipal
landfill sites. Facilities for the recycling of waste
materials in Malawi are very limited, as are suitable
off-site waste disposal locations. Office paper is mixed
with rice husks and recycled into energy brickettes
for use in cooking. Other waste materials generated
at KM require on-site disposal so the wastes are
categorised and segregated into their types and
directed to appropriate on site waste disposal sites.
Sewerage treatment plants are installed at both
mine sites to treat sewage. Treated sewage from the
plants is directed to the process water pond at LHM,
and at KM to the water pond and TSF. Waste oils are
collected by licensed contractors in both Namibia and
Malawi and taken off-site for recycling or disposal.
Environmental Incidents
A standardised Paladin Incident Reporting Procedure
is in place to ensure there is consistency across
the business in terms of incident classification and
reporting. Statistics and information on incidents
occurring during the reporting period will be included
in the 2016 Sustainability Report.
Closure
Mine closure planning is a key component of Paladin’s
commitment to Sustainable Development. A Closure
Standard is in place for all of Paladin’s developing
and operational sites. The intent of the Standard is
to ensure that Paladin’s sites are left in a safe and
stable manner and that environmental and social
impacts are minimised so that tenements can be
relinquished without future liability to the Company,
government or the community. During the reporting
period, the LHM Draft Mine Closure Plan and Closure
Strategy were being revised and updated to reflect
current and future mine plans. A Closure Strategy
has been prepared for KM and progress continued on
the preparation of a Draft Mine Closure Plan.
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
to achieve
Paladin seeks
these objectives by
example, both through its own actions and by its
active participation
industry and community-
based organisations that foster and promote these
values and aspirations. Below is a summary of the
organisations in which the Company participates:
in
• Paladin played an instrumental role in
establishing the Australia-Africa Mining
Industry Group (AAMIG) – an industry body
that facilitates the sharing of knowledge and
experience to create better outcomes on the
ground. It partners with Australian and African
governments to promote active engagement and
promotes best practice in CSR among Australian
mining companies active in Africa.
• Paladin has committed to the principles
contained in Enduring Value – the Australian
Minerals Industry Framework for Sustainable
Development. This commitment is aligned with
the Ten Sustainable Development Principles of
the International Council on Mining and Metals.
• Paladin supports the Extractive Industries
Transparency Initiative (EITI) and has registered
as an EITI Supporting Company, endorsing its
principles and criteria. Taxes paid by Paladin
to the Malawian and Namibian governments
are presented in the Company’s Sustainability
Report.
• Paladin supports and respects a number of
international guiding documents and seeks
to conduct its business in accordance with
the spirit and intent of them. These include
the UN International Bill of Human Rights,
the UN Guiding Principles on Business and
Human Rights, The UN Global Compact, the ILO
Declaration, the Voluntary Principles on Security
and Human Rights, the OECD Guidelines for
Multi-National Enterprises and the Equator
Principles. These are embodied in Paladin’s
governance framework.
• Paladin’s CSR programmes are developed,
managed and assessed in compliance with the
Group’s Community Relations Policy.
• Paladin contributes significantly to those
economies in its countries of operation through a
variety of government taxes. These are detailed
below for both Malawi and Namibia, where the
Group’s mines are located. It should be noted
that the Kayelekera Mine in Malawi is currently
on care and maintenance.
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CORPORATE SOCIAL RESPONSIBILITY
Paladin’s purpose is to create value for its shareholders.
In pursuit of this goal, the Company recognises that
encompassing economic, environmental and social
values are all important components of corporate
success. Paladin stakeholders expect their Company
to be a good corporate citizen, with fair and beneficial
business practices focused on: operating to the
highest ethical standards; contributing to the growth
and prosperity of host countries and responding
positively to community needs. Paladin’s approach
to Corporate Social Responsibility (CSR) – as with its
commitment to sustainability – involves:
• Top-level support of the Board of Directors and
CEO;
• Adherence to principles enunciated in Corporate
Policy and Procedures;
• Programmes aligned with host country Global
Goals for Sustainable Development;
• Personnel dedicated to achieving CSR objectives;
• Compliance with recognised international codes
of conduct;
• Acknowledgement of voluntary standards; and,
• Reporting in accordance with the Global
Reporting Initiative.
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PAYMENTS TO THE GOVERNMENT OF MALAWI FOR THE YEAR ENDED 30 JUNE 2016
Payroll Tax
USD 1,105,997
Withholding Tax
USD 116,649
Fringe Benefits Tax
USD 9,514
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PAYMENTS TO THE GOVERNMENT OF NAMIBIA FOR THE YEAR ENDED 30 JUNE 2016
Namibia Training Authority
USD 144,545
Rates, Taxes & Licenses
USD 1,568
NamPower
USD 5,723,000
NamPost
USD 413
NamWater
USD 5,101,820
Telecom Namibia
USD 84,569
Payroll Tax
USD 2,924,644
Royalties
USD 4,982,697
Erongo Regional
Electricity Distributor
USD 221,036
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PAYMENTS TO THE CANADIAN GOVERNMENT FOR THE YEAR ENDED 30 JUNE 2016
Health & Post Secondary
Education Tax (Gov’t of
Newfoundland & Labrador)
USD 10,167
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Employment Insurance
(Gov’t of Canada)
USD 10,399
Canada Pension Plan
(Gov’t of Canada)
USD 18,815
PAYMENTS TO THE AUSTRALIAN GOVERNMENT FOR THE YEAR ENDED 30 JUNE 2016
BAS
USD 55,848
Mt Isa City Council
USD 3,397
Payroll Tax Qld
USD 391
Department of Transport
USD 2,535
Shire of Carnarvon
USD 2,800
Shire of Ashburton
USD 45,696
Queensland Health
USD 3,879
Department of Mines
USD 185,898
Department of Environment and
Heritage Protection USD 2,478
Payroll Tax WA
USD 445,448
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Human Rights
Paladin is committed to respecting human rights
and fundamental freedoms. The Company’s overall
approach to human rights issues is reflected in its
Human Rights Policy, which can be found on the
Paladin website.
to assist
The Human Rights Policy provides the overarching
framework
in achieving Paladin’s
commitment to respect human rights throughout its
business. The Board reviews this regularly to ensure
that it is current and that the requirements of the
Policy reflect Paladin’s commitment to human rights
principles.
Training on human rights is conducted across the
entire Paladin Group at all levels. This also extends to
key external stakeholders and suppliers with specific
training tailored for the security contingents at each
site.
Industry Participation
As a leading participant in the global uranium sector,
Paladin plays an active and responsible role in public
policy development, both corporately in Australia
and through Group subsidiary companies in their
respective constituencies.
The Company is a member of the Minerals Council
of Australia (MCA), which represents Australia’s
exploration, mining and minerals processing industry,
nationally and internationally, in its contribution to
sustainable development and society.
The Australian Uranium Association (AUA) has been
integrated into the MCA and is now represented
specifically through the Uranium Forum of the MCA.
As such, Paladin is committed to abiding by and
implementing the terms of the Uranium Industry
Code of Practice. Along with the Code, the Group
observes the Charter and Principles of Uranium
Stewardship, which provide a guide to doing business
ethically, responsibly and safely. Together, the Code,
Charter and Stewardship Principles make up a vital
standards framework for the uranium industry.
Senior management across the Group at both board
and committee level are actively involved in a number
of industry and policy making organisations. These
include the MCA, Uranium Council of Australia,
Advisory Group for IAEA, AAMIG and the Chamber of
Mines and Energy of Namibia.
It is pleasing to note that a report issued in 2015 by
the Danish Institute for International Studies titled
“Corporate Engagement in Non-Proliferation along
the Nuclear Supply Chain and Material Stewardship
and Traceability in Uranium Procurement” shows
Paladin as an example …”Paladin can be seen as
having one of the most robust approaches to this issue
among all eight leading mining companies…..; and …”
sets the example on Uranium Stewardship”.
LHUPL was a founding member of the Swakopmund-
based Namibian Uranium Institute (NUI) in 2009.
The NUI provides support and advice for industry
members, operates a Uranium Information Centre,
and engages with the public and scientific community
through hosting training and information events,
meetings and workshops. The Institute’s aim is
to improve the quality of healthcare, environment
management and radiation safety in Namibia.
LHUPL also supports
the Namibian Uranium
Association (NUA), an advocacy body that represents
the uranium industry exclusively.
Members of the NUA work co-operatively to ensure
the Namibian uranium exploration, mining and
exporting industry is able to operate, expand and
thrive safely and efficiently. The NUA’s Board of
Directors, of which LHUPL’s Managing Director,
Simon Solomons, is a member, also governs the NUI,
which is an industry training and research centre.
LHUPL is represented on four of its working groups
– Water Quality, Sustainable Development, Radiation
Safety and Swakop River Farmers.
LHM continues to provide strong support to the
Namibian Chamber of Mines, which organised
a Namibian Mining Expo in April 2016. This very
successful conference was attended by almost 500
delegates from all over the country and from South
Africa and provided an important forum for interaction
between industry leaders and stakeholders.
Stakeholder Interaction
Regular meetings are conducted with the stakeholder
groups in countries where Paladin has interests.
These interactions include regular and/or informal
meetings with:
• Community groups;
• Environmental groups;
• Host nation government ministers and senior
civil servants;
• Indigenous groups;
• Civil Society Organisations; and
• Employees and their representative
organisations.
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footprint extends throughout the Karonga District,
so ensuring that villages other than those in the
immediate vicinity of KM benefit from its programmes.
Garnet Halliday Karonga Water Supply Project
The Garnet Halliday Karonga Water Project was built
at a cost of more than US$10M and is the centrepiece
of Paladin’s Social Development commitment to
Malawi, the objective being to provide a safe and
reliable water supply to the Town of Karonga.
The plant is now operating as per design, providing
Karonga with a safe and reliable water supply that
will meet the town’s projected needs until 2025.
During the year maintenance support continued to be
provided.
Community Liaison
Engagement with the community locally is formalised
through the District Executive Committee (DEC)
stakeholders’ meetings, which are held monthly and
are used as a community information forum and to
address any stakeholder questions or concerns that
arise.
Monthly meetings are held with the Kayelekera
village leadership and, on a more informal basis,
with the Karonga District Commissioner and her
staff together with traditional authorities and their
advisors. Attendance at the Village Development
Committee assists in communicating about current
CSR projects. The Company engages individually with
NGOs in the region and is in regular contact with
the District Education Manager, the District Health
Administrator and the District Ministry of Water and
Irrigation.
These forums ensure open communication between
local stakeholders and the Company, particularly
with the local CSR team on the ground and operating
in the community on a daily basis.
Community Education and HIV/AIDS Awareness
though no
in
There are 36 education-through-storybooks
longer being circulated,
circulation
covering a variety of community-focused subjects,
and has been translated into a number of local
languages. They continue to be a very effective
communications medium and remain extremely
popular, given the general lack of reading material in
the district, particularly in local languages.
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INTERNATIONAL INITIATIVES
Malaria Treatment for Children
Paladin has continued to provide support to Suda Ltd
for Suda’s development of ArTiMist™, a sub-lingual
(under the tongue) spray for the treatment of severe
and complicated malaria in children.
Suda announced the results from a Phase III trial of
ArTiMist™ in 2013, which was a comparative study
against intravenous quinine. The report from the trial
identified that ArTiMist™ was superior when compared
to IV quinine. Approximately 95% of the patients
treated with ArTiMist™ had parasite count reduced by
more than 90% within 24 hours versus 40.6% of the
patients treated with IV quinine. Suda is working with
the Medicines for Malaria Venture and other groups
to expand the opportunity for ArTiMist™ by evaluating
the product as an early interventional treatment
before patients are referred to hospital. Suda and its
Clinical Advisory Board are finalising the design of a
pivotal clinical trial of ArTiMist™ in the pre-referral
setting and Suda aims to secure philanthropic funding
from global organisations to support the trial.
The majority of deaths from severe malaria in
childhood are caused by the delayed administration of
effective anti-malarial treatment. There is a relentless
deterioration in the clinical condition of a young child
with malaria who fails to get effective treatment, with
death ensuing in a matter of hours or days.
Suda believes that ArTiMist™ has the potential to
be an effective pre-referral medication. It has the
potential to significantly reduce child mortality and
the adverse effects suffered by children, particularly
within the first 24 hours of infection.
MALAWI
Paladin has continued to fulfil its Social Development
responsibilities
in Malawi under the terms of
the Kayelekera Development Agreement and
Environmental Impact Assessment Social Impact
Control Programme. Following on from its decision to
place KM on care and maintenance last year, Paladin
has maintained its community relations presence
in Karonga, albeit at a reduced level of expenditure
consistent with Kayelekera’s non-producing status.
Paladin began the construction of a village clinic at
the Kayelekera village, which is due for completion
in CY2016.
its ongoing community
Paladin has continued
focused primarily on health and
programmes
education. Through its corporate CSR programmes
and projects undertaken and funded by the Paladin
staff charity, Friends and Employees for African
Children (FEPAC), the Company social development
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Community Health Care
NAMIBIA
Paladin continued its support of local health clinics
by providing transport for government medical staff
in the region, alleviating the need for local villagers to
travel long distances, and facilitating an under-fives
clinic.
The construction of the local clinic has begun and
should be completed in September CY2016.
Paladin also runs a mosquito control programme in
Kayelekera Village, Juma Village and at the mine and
accommodation areas, as a very effective malaria-
control mechanism.
Educational Support
In line with Paladin Energy’s policies and procedures,
LHUPL continues
the Government
to support
of Namibia in its endeavours to develop skilled,
talented, ambitious and productive citizens, focussing
specifically on its immediate impact areas within the
Erongo region.
LHUPL’s core Community Investments (CI) focus
areas are Education and Skills; Sports and Culture;
as well as Health. The primary target group of all
LHUPL’s community investments is the Namibian
youth.
During the year, LHUPL supported the following
programmes:
Paladin’s Community Relations team continues
to assist in the maintenance of local schools and
teacher housing, assistance with teacher wages and
provision of a variety of educational supplies. No
longer providing Christmas gifts.
An annual donation from a Paladin board member
pays for the school fees for 105 girls who would
otherwise not be able to finish their education to a
secondary level.
In the 1st quarter of 2016 Paladin installed twelve
windows including frames, glass and fly wire to two
teachers houses at Kalowe primary school. The
houses were originally supplied and built by Paladin
in 2014 and the windows were only covered by fly wire.
In the 2nd quarter Paladin has installed solar panels
for electrical supply at the Kayelekera community
secondary school, the panels were supplied by the
school with Paladin only supplying the technical
support for installation and commissioning.
Paladin has sponsored a boom gate and installation
at Kapoka police road block that was requested by
the Chitipa police officer in charge, this has all been
prepared ready for installation and currently waiting
for approval from the Malawi road authority to carry
out excavations and installation which will be done by
Paladin.
Paladin donated twelve 44 gallon drums to the Karonga
TWESA community development organization to be
used as rubbish bins, these drums were cleaned
and painted with the Paladin logo then delivered to
the TWESA community development organisation for
distribution.
In the 1st quarter of 2016 Paladin repaired the
community foot bridge over the Seri River at
Kayelekera village due to the bridge being damaged
during a high water flooding event.
EDUCATION
Mondesa Youth Opportunities (MYO)
This non-profit organisation, established in 2005
as an after-school programme, offers financially
underprivileged, yet academically able Grade 4 to 8
learners with after school lessons in Mathematics;
English; Life, Music and Computer skills. The Centre
supports 120 learners on an annual basis with its
whole child approach, which incorporates academic
and sport performance as well as physical, emotional
and nutritional health (through a feeding programme).
LHUPL has been the main sponsor of MYO for the
past six years and with a donation of N$1.2M made
during the year, completed the second year of a five
year commitment with MYO. The funds are utilised for
the annual running costs of the Centre. Redundant
computer equipment was also donated to the Centre’s
computer laboratory.
The National Mathematics Congress
Skilled teachers are one of the most critical
success factors for effective education, while a
focus on teacher development assures a bigger
outreach and impact. LHUPL therefore supports the
Annual Mathematics Congress which targets the
development of mathematics and teaching skills
of teachers across Namibia. The theme of the 11th
Annual Congress held in April 2016 was ‘Making
Connections: Linking Concepts and Context’ and
provided more than 300 teachers from all 14 regions
of Namibia with practical, hands-on experience in
using visualisation in the classroom; linking playing
with learning; linking assessment with teaching; and
using scientific calculators amongst others. With a
donation of N$250,000, LHUPL maintained its role as
the main sponsor of the event since 2009.
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The Mathematics Enrichment and Support
Programme
This Programme was initiated by LHUPL six years
ago and supports gifted learners in reaching their
full academic potential. Through curriculum-based
after school classes provided throughout the year, it
benefits senior secondary learners enrolled for higher
level or extended level mathematics. Other activities
include mathematics spring schools, regional
mathematics competitions and teacher mathematics
workshops. On average, the programme benefits 200
learners on an annual basis. LHUPL’s contribution
was N$220,000 during the past financial year.
Ad-hoc Education Support Donations
LHUPL understands
the value of celebrating
successes and therefore spent a total of N$70,000
towards supporting various performance recognition
initiatives of local primary and secondary schools, the
University of Science and Technology, as well as the
Regional Teachers Awards hosted by the Regional
Directorate of Education, Arts and Culture.
The mine also supported the Annual National
Debating Championships to the tune of N$20,000.
ENVIRONMENT
COMMUNITY
Blue Waters Sports Club
LHUPL has been in a long-term partnership with a
local Sports Club registered in the Namibia Premier
League. The Blue Waters Sports Club, founded
in 1936, is the second oldest active sports club in
Namibia, still full of history and culture. LHUPL’s
support goes towards the promotion of youth sports in
codes such as boys’ and girls’ soccer, boys’ and girls’
handball, netball, girls’ and boys’ cricket. On average,
160 young girls and boys, mostly from schools in low
income areas, benefit from the Programme. The
Programme also creates short-term employment
opportunities for at least 10 coaches and 20 soccer
players contracted to play for the team in the National
Premier League.
Young Namibian athletes gain from national and
international exposure during competitions. The
Club also has a programme supporting schools’
sports administration and coaching.
In addition, LHUPL supports various short-term
sports development and promotion activities. During
the past financial year, a total of N$331,500 was
invested, N$250,000 thereof towards the Blue Waters
Sports Club.
Gobabeb Training and Research Internship
Programme (GRTIP)
Food Assistance Programme
LHUPL has been supporting two feeding schemes,
Promiseland Trust and Eagle Christian Centre, for
the past six years. Combined, the schemes cater for
up to 600 disadvantaged children in two surrounding
communities on a daily basis. Both have expanded
their activities to include pre-school classes, with the
Promiseland Trust using the Montessori Education
Model. The latter also has a foster child programme
in place. During the reporting period, LHUPL invested
a total of N$333,000 in the two schemes.
While agriculture remains one of the backbones
of the Namibian economy in terms of job creation,
LHUPL supported vegetable production projects in
the Omaheke region to the tune of N$24,000 due to
its additional potential for household food security
assurance.
The Gobabeb Training and Research Centre supports
the development of scientific research skills of young
environmental professionals through a five-month
field-based
internship programme facilitated at
its Centre located in the Namib Desert. It aims to
build capacity for the sustainable management of
Namibia’s natural resources.
Students, chosen after an
intensive selection
process, are expected to design and implement
independent research projects focused
original,
on the management and restoration of degraded
ecosystems. Close mentorship and supervision to
ensure scientific quality are maintained, while critical
thinking, systematic problem solving and improved
communication skills are fostered.
LHUPL began its involvement in the GTRIP in 2014
with a pledge of N$1.2M over a 5 year period. To
date, the Programme concluded the second round,
with nine young Namibians who have successfully
completed the Programme.
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Special Projects
CANADA
Poverty and physical and mental disabilities often
go hand in hand. People living with disabilities are
often the most marginalised members of society
with limited access to basic public services such as
education and health. They are mostly isolated due
to discrimination and stigmatisation. Orphaned
and Vulnerable Children (OVC) are also often kept
from mainstream society and make up the highest
percentage of disadvantaged children in Namibia.
Through funds raised during its Annual Charity Golf
events, LHUPL supports various projects focussed
on providing care to disabled people and OVCs in
an effort to contribute to the improvement of their
living conditions. Projects supported during the past
financial year included the Walvis Bay Child and
Family Centre, which was registered 20 years ago as
a non-profit “child-centered” organisation dedicated
to children in the community who are differently
abled and suffer from diseases and disorders. The
Centre supports 108 people with varying physical
and mental challenges through therapeutic and
psychological therapy (children and affected families);
skills training (gardening, needlework, woodwork,
music, visual art); sports participation and external
exposure; employment opportunities to 21 previous
beneficiaries; daily feeding schemes; reintegration
into school; job placements at local organisations
and entrepreneurship training for affected mothers.
Apart from donations, the Centre sustains it activities
with small initiatives towards self-sustainability such
as catering services, a vegetable garden, and the sale
of self-made artefacts.
LHUPL also supported 120 financially vulnerable
children enrolled in local primary and secondary
schools through school uniform donations.
Australian Initiatives
five-year
In 2011, Paladin made a
financial
commitment to the Hammond-Nisbet Geoscience
Fund administered by the University of Western
Australia (UWA). The fund supports the creation of
an endowed professorship within UWA’s Centre for
Exploration Targeting (CET). This research-intensive
position focusses on mentoring new generations
of geoscientists
fieldwork
and structural geophysics and
in applying this
understanding to mineral systems and exploration
targeting.
interpretation of
in
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Aurora continues to maintain an active presence
in the Labrador communities. Donations focus
on education and
training, aboriginal cultural
initiatives, youth and sport. During the year, Aurora
contributed to 15 community events and initiatives.
Community activities have included public meetings
to inform residents of Aurora’s activities and to seek
their feedback. Regular contact with Provincial
and Nunatsiavut government officials has been
maintained and Aurora continues to enjoy good
support from the governments and local residents.
Aurora’s contribution to the economic well-being of
Labrador continues through extensive use of local
contractors for camp support and by hiring up to
20 local staff per field season, a practice that has
been widely appreciated by Nunatsiavut officials and
residents.
EMPLOYEE CHARITABLE FOUNDATION,
SUPPORTED BY PALADIN
Friends and Employees of Paladin for African Children
(FEPAC) is a charitable foundation established in 2008
by Paladin employees to fund social projects that are
outside the scope of the Company’s CSR programmes.
The charity supports four organisations in Malawi
that assist orphaned children with educational needs
and vocational training courses. These include
two organisations that support kindergarten aged
children where they receive porridge for breakfast,
which for many may be their only meal of the day, and
age appropriate lessons.
Two vocational brick laying training course began in
FY2016 for two groups of 10 teenagers. To date 158
teenagers have completed these courses and have
been given the tools of their trade to enable them
to earn money to support their younger siblings.
On completion of the courses, the students also
complete a five-day, small business training course
to teach them the basic fundamentals for setting up
their own small businesses.
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FEPAC also supports a school for the visually impaired
and a school for deaf children. Over the years FEPAC
has helped fund the construction of classrooms,
dormitories and teacher’s houses for these schools
as well as assisting with their monthly running costs.
FEPAC is in the process of approving a capital donation
to each of the organisations that is expected will meet
the cost of an investment in a self-sustaining project.
These self-sustaining projects have been designed
to generate both ongoing food and income for the
organisation that will exceed FEPAC’s current annual
funding contribution. The projects have been planned
to give the organisations that FEPAC has supported
over the years the best chance of continuing their
good work in a sustainable way for many years to come.
OUR PEOPLE
The Company has spent the past year focussing on
reviewing its workforce throughout all departments
and projects with a view of efficiency, rationalisation
and consolidation. This has led to a continued
decrease in total employee numbers seen across
the Group. Turnover for the Group is detailed in the
following table.
Location
Total at Year-
end
Female %
Local Nationals %
Turnover %*
Australia
Namibia
Corporate, administration,
financial & marketing
Technical Services
Exploration
LHM
KM
Malawi
Exploration
Canada
Exploration
Total
12
5
5
338
176
2
4
542
41.67%
25.00%
20.00%
17.00%
6.74%
0%
0%
14.05%
Employee turnover is based on a 12 month rolling average.
*
** Due to retrenchments during the financial year
n/a
n/a
n/a
93.00%
94.90%
100%
100%
6.27%**
5.74%**
4.17%**
24.04%
44.08%
0%
5.30%**
Diversity overall, and gender diversity specifically, remains a focus and, despite the overall headcount
decreasing over the period, the percentage of female representation within the workforce has remained
reasonably steady. Supporting a diverse workforce remains one of the cornerstones of Paladin’s strategy
with a commitment to equitable gender representation amongst its workforce, balanced with availability
of appropriate candidates in the region of operation. Further information on diversity can be found in the
Corporate Governance Statement available on Paladin’s website.
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Australia (Head Office & Mount Isa)
The Perth head office currently has 22 employees, a
reduction from 46 at the same time last year. Females
within the head office represent 31.81% of employees
and 71.43% of all females employed hold roles within
the professional, managerial or senior management
categories.
During the period, the 12 month rolling total turnover
was 50.25% in comparison to 24.27% at the same
time last year. In light of the continued focus on
consolidating the organisational structure 22 roles
were made redundant. In
instances of natural
attrition only those roles that were deemed essential
were replaced, resulting in a reduction of a further
two roles.
In line with the continued focus on rationalising
costs, there were no salary increases and the senior
management team accepted a further 10% salary
reduction. All executive managers participated in
performance reviews in an effort to reinforce both
a culture of continuous improvement and provide
an element to measure performance within the
leadership team.
The year ahead will see a continued focus on retaining
key skills in an environment of cost rationalisation.
In addition, a review of succession plans that are
currently in place for key roles will be undertaken
ensuring a robust strategy to address concerns
should they arise.
Exploration
Group-wide the exploration team totals 11 spread
across projects based in Australia, Malawi and Canada.
Paladin places a large focus on the development of its
geoscience capabilities and has the benefit of exposing
its professionals to a number of different geological
terrains and environments within the global project
portfolio. Additionally, a number of senior technical
individuals within the Group are consistently invited
to present papers at industry conferences, providing
yet another opportunity to transfer expert knowledge
amongst the Group and aid in the development of
junior professionals.
The Perth based exploration team is a small group
predominantly comprised of senior technical roles
focussed on providing support and guidance across
the Group. This small group consistently has minimal
turnover and currently has an average tenure of 7.35
years of service within the team.
As a result of the continued focus on reviewing the
group’s workforce the Aurora Exploration, based in
Canada, had eight roles that were made redundant,
with four roles being retained. Those individuals
retrenched all received severance packages
in
recognition of their service with the Company. This
has impacted on the turnover figure for Aurora which
has historically experienced low turnover. When the
Company is active in exploration, it also employs up
to 30 seasonal staff for each field season. Of these
individuals, generally 80% are employed from the
surrounding communities of Postville, Makkovik and
Rigolet with the majority consistently re-employed for
the past field seasons.
Malawi (Kayelekera Mine)
With KM remaining on C&M, the focus has continued
to be on adapting the workforce and operations to
better suit this change. The current financial year has
seen the operation in a more settled state within C&M,
and further reviews of the organisational structure
during the year further decreases to both the national
and expatriate employee numbers throughout the
year. At year end there were 167 national employees,
an additional 9 expatriates. Turnover has remained
steady.
Although cost reduction is a priority, a conscious
effort has been made to ensure that the opportunity
to develop high performing employees has been
retained via ongoing study assistance programmes.
A number of employees are currently undergoing
further education relevant to their roles, with KM both
paying the fees and providing paid leave for study and
examination purposes. Additionally, mentoring and
one-on-one career development remains a focus for
the leadership team.
Cross-development opportunities are also made
available where possible in order to provide exposure
to other operations within the Paladin portfolio for key
roles and individuals.
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During mid-July of 2016 the Mineworkers Union of
Namibia (MUN) and LHM made a tremendous leap
forward in terms of industrial relations, when the
Recognition and Procedural Agreement (outstanding
for approximately three years) was finally signed off
by the parties. In a last desperate attempt to either
agree or have no agreement in place, parties really
engaged each other in good faith and finally agreed
on terms which benefit both parties. This agreement
will now regulate the relationship between the MUN
and LHM and provide structure and procedures to
the parties. This agreement further regulates the
rights and duties of each party. There are still four
outstanding labour disputes between the MUN and
LHM, which should most likely be resolved before
the end of CY2016. The first retrenchment procedure
was followed at LHM this year, and at the end only
one employee remained affected. Three alternative
work offers are still pending. Should the offers not be
accepted, the matter will be referred for conciliation,
which aims to assist parties to come to a resolution.
LHM continues to benchmark remuneration levels
within the Mining Industry, with a remuneration
review of all roles measured against peers within
the Namibian mining industry undertaken annually,
allowing LHM to ensure that competitive remuneration
packages are offered. The Key Employee Retention
Scheme remains active to assist in retention of key
individuals and top performers. Furthermore, the
Company has introduced a formal performance
evaluation system which was implemented in January
2016.
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Namibia (Langer Heinrich Mine)
In response to Swakop Uranium’s ongoing and
aggressive recruitment campaign for
its Husab
Mine as well as recruitment drives by other large
companies, LHM has struggled with the retention
of skilled roles resulting in a 12 month rolling
total turnover of 24.04%. Hardest hit has been the
Processing and Engineering department.
implemented
LHM facilitates an in-house Processing training
programme. An internal competency-based training
programme has been
to allow
recruitment of individuals with less experience. This
strategy allows for a sustainable solution to the
shortage of skilled labour currently being experienced.
The Namibian government has
introduced a
Vocational Educational & Training Levy which is set
at 1% of a company’s total annual payroll. In the past
12 months LHM has invested N$2.5M into the training
and development of its employees, representing 1.4%
of total annual payroll.
As in previous years LHM places a focus on attracting
graduates and trainees allowing development of a
pipeline of future skilled individuals and potential
leaders. To enable this, LHM offers a number of
bursary opportunities within the year, both internal
and external, allowing for formal training and
education opportunities to be coupled with internal
development and mentoring. There are currently 30
graduates and artisan interns within the disciplines
of Engineering, Metallurgy, Supply Chain, Finance,
Geology, Mining and Radiation Management, and LHM
places a large focus on transitioning those graduates
into permanent roles within the organisation which
has been consistently successful. LHM’s
long
standing relationship with the Namibian Institute
of Mining Technology (NIMT) creates an opportunity
to provide the hands-on training components of the
skilled trades and, in turn, LHM has access to a
number of skilled artisans upon completion of their
studies. LHM has also embarked on an internship
programme for newly qualified artisans, providing 1
year technical internships in the various trades. With
the current shortage of local artisans, the relationship
with NIMT as well as the internship programme, will
play a significant and ongoing role in the ability to
attract skilled individuals.
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LHM is compliant with all requirements of the
Affirmative Action Act and has a consultative forum
which is an integral part of its affirmative action
strategy. Furthermore, it is committed to, and fully
supports, the policy of equal opportunity employment
and non-discrimination through
its measurable
Affirmative Action Plan. The LHM Affirmative Action
Report reflects the following demographics based on
the calendar year reporting cycle:
% Female Employees
% Historically Racially
Disadvantaged
Employees*
% Non-Namibians
Total Employees
CY2014
CY2015 & 16
18.7%
18.4%
89.3%
84.8%
1.7%
363
9.0%
446**
*
**
As defined in the Affirmative Action
(Employment) Act 1998
Includes FTC employee numbers
LHM places significant importance on employee
health and wellness and collaborates with external
health organisations (e.g. The Cancer Association of
Namibia and Namibian Blood Transfusion Service),
who provide employee wellness screenings and
counselling events on site. Membership to private
health insurance is a condition of employment at LHU
and the Medical Aid providers counsel employees on
healthy lifestyle choices and in identifying the risks
associated with unhealthy practices resulting in issues
such as high blood pressure, elevated cholesterol,
HIV and other themes common to Namibia.
The year ahead will see a continued focus on the
internal training and development in response to the
current tight labour market, coupled with retention
measures to attempt to stabilise the turnover rate.
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CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE FRAMEWORK
The Board of Directors of Paladin Energy Ltd is responsible for the corporate governance of the
Group.
Centre on its website at www.paladinenergy.
com.au, along with the ASX Appendix 4G, a
checklist cross-referencing the ASX Principles
and Recommendations to disclosures in this
statement, the current Annual Report and the
Company website. The Corporate Governance
Statement, together with the 4G, have been
lodged with the ASX on 24 August 2016.
The Company reviews and amends its corporate
governance policies as appropriate to reflect
the growth of the Company, current legislation
and good practice. Copies or summaries of key
corporate governance policy documents can be
found on the Company’s website
(www.paladinenergy.com.au).
Paladin has adopted systems of control and
accountability as the basis for the administration
of corporate governance.
This Corporate Governance Statement, dated
30 June 2016 and approved by the Board on 22
August 2016, outlines the key principles and
practices of the Company which, taken as a
whole, represents the system of governance.
Shareholders are reminded that Paladin operates
with a dual-listing in Australia on the ASX and
in Canada on the Toronto Stock Exchange (TSX).
In formulating the governance framework, the
regulatory requirements in both Australia and
Canada have been taken into account.
The ASX Listing Rules require the Company to
report on the extent to which it has followed
the Corporate Governance Recommendations
contained in the ASX Corporate Governance
Council’s (ASX CGC) 3rd Edition of its Corporate
Governance Principles and Recommendations.
For FY2016, Paladin has complied with all
the recommendations and has referenced
these throughout this Corporate Governance
Statement. Further, the Company also complies
the Ontario Securities Commission’s
with
corporate governance requirements as set out in
National Instrument 58-101. Paladin’s Corporate
Governance Statement can be found in the
Corporate Governance section of the Investor
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
DIRECTORS’ REPORT
The Directors present their report on the Group consisting of Paladin Energy Ltd (Company)
and the entities (Group) it controlled at the end of, or during, the year ended 30 June 2016.
DIRECTORS
The following persons were Directors of Paladin Energy Ltd and were in office for this entire
period unless otherwise stated:
Mr Rick Wayne Crabb B. Juris (Hons), LLB, MBA, FAICD
(Non-executive Chairman) Age 59
Mr Crabb holds degrees of Bachelor of Jurisprudence (Honours), Bachelor of Laws and
Master of Business Administration from the University of Western Australia. He practised
as a solicitor from 1980 to 2004 specialising in mining, corporate and commercial law and
advised in relation to numerous project developments in Australia and Africa. Mr Crabb now
focuses on his public company directorships and investments. He has been involved as a
director and strategic shareholder in a number of successful public companies. He is also the
non-executive chairman of Golden Rim Resources Ltd (since August 2001) and was chairman,
non-executive director of Otto Energy Ltd (from November 2004 to November 2015) and
Platypus Minerals Ltd (formerly Ashburton Minerals Ltd) (from September 1999 to October
2015). Mr Crabb is a councillor on the Western Australian Division of the Australian Institute
of Company Directors.
Mr Crabb was appointed to the Paladin Board on 8 February 1994 and as Chairman on 27
March 2003.
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Special Responsibilities
Chairman of the Board
Member of Remuneration Committee from 1 June 2005
Member of Nomination Committee from 1 June 2005
Member of Sustainability Committee from 25 November 2010
Mr John Borshoff B.Sc., F.AusIMM, FAICD (resigned 10 August 2015)
(Managing Director/Chief Executive Officer) Age 71
Mr Borshoff is a geologist who has been involved in the Australian and African exploration and
mining industry for over 30 years. Mr Borshoff worked for International Nickel and Canadian
Superior Mining before joining a German mining group, Uranerz from 1976 to 1991. He
became Chief Geologist/Exploration Manager during the period 1981-1986 and served as its
chief executive from 1987 to mid-1991, when the German parent of Uranerz made the decision
to close its Australian operations. The primary focus of the Uranerz Group was the search for
and development of uranium with the company operating extensively throughout Australia,
North America and Africa.
Mr Borshoff has extensive knowledge of the uranium industry and experience in company
management and strategic planning. He serves on the Board of the Minerals Council of
Australia.
Mr Borshoff founded Paladin and was appointed to the Paladin Board on 24 September 1993.
Special Responsibilities
Managing Director/Chief Executive Officer (resigned 10 August 2015)
Member of Nomination Committee from 1 June 2005 (resigned 10 August 2015)
Member of Sustainability Committee from 25 November 2010 (resigned 10 August 2015)
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
Mr Sean Reveille Llewelyn LL.B, MAICD
(resigned 21 August 2015)
(Non-executive Director) Age 68
Mr Llewelyn originally qualified, and
practised, as a solicitor in Australia and then
re-qualified in England. He has subsequently
worked in the finance and merchant banking
industries for more than 20 years in Australia,
the UK, the United States and South Africa. His
considerable finance experience has been in
derivatives (a founder, President and CEO of
Capital Market Technology Inc.), structured
finance and early stage investment relating
to the metal markets. He has been involved
with the uranium industry for many years
and has a comprehensive understanding of
the uranium market.
Mr Llewelyn was the instigator and driving a
force in the formation of Nufcor International
Ltd, a major uranium marketing company,
initially jointly owned between Anglo Gold
and First Rand International.
Mr Llewelyn was appointed to the Paladin
Board on 12 April 2005.
Special Responsibilities
Member of Audit Committee from 12 April
2005 (resigned 21 August 2015)
Chairman of Remuneration Committee from
26 November 2008 (member from 1 June
2005) (resigned 21 August 2015)
Chairman of Nomination Committee from 26
November 2008 (member from 1 June 2005)
(resigned 21 August 2015)
Mr Donald Shumka B.A., MBA
(Non-executive Director) Age 74
Mr Shumka is a Vancouver-based Corporate
Director with more than 40 years’ experience
in financial roles. From 2004 to 2011, he was
President and Managing Director of Walden
Management, a consulting firm specialising
in natural resources. From 1989 to 2004, he
was Managing Director, Investment Banking
with CIBC World Markets and Raymond
James Ltd. Prior to 1989, Mr Shumka was
Vice President, Finance and Chief Financial
Officer of West Fraser Timber Co. Ltd.,
one of Canada’s largest forest products
companies. He holds a Bachelor of Arts
Degree in Economics from the University of
British Columbia and a Master of Business
Administration Degree
from Harvard
University. Mr Shumka is also a director of
Alterra Energy Corp. (since March 2008),
Odin Mining and Exploration Ltd (since July
2014), RIWI Corporation (since September
2015) and was a director of Eldorado Gold
Corp. (from May 2005 to May 2016).
Mr Shumka was appointed to the Paladin
Board on 9 July 2007.
Special Responsibilities
Chairman of Audit Committee from 9 July
2007
Member of Remuneration Committee from
10 August 2007
Member of Nomination Committee from 9
July 2007
Mr Peter Mark Donkin BEc, LLB. F Fin,
MAICD
(Non-executive Director) Age 59
Mr Donkin has over 30 years’ experience in
finance, including 20 years arranging finance
in the mining sector. He was previously the
Managing Director of the Mining Finance
Division of Société Générale in Australia,
having worked for that bank for 21 years
in both their Sydney and London offices.
Prior to that, he was with the corporate
and international banking division of the
Royal Bank of Canada. His experience
has
for
involved arranging transactions
mining companies, both in Australia and
internationally, in a wide variety of financial
products,
finance,
corporate finance, acquisition finance, export
including
project
finance and early stage investment capital.
Mr Donkin holds a Bachelor of Economics
degree and a Bachelor of Law degree from
the University of Sydney. He is a director
of Allegiance Coal Ltd (since 2010) and was
previously a director of Sphere Minerals Ltd
(from March 2010 to November 2010) and
Carbine Tungsten Ltd (from February to April
2013).
Mr Donkin was appointed to the Paladin
Board on 1 July 2010.
Special Responsibilities
Member of Audit Committee
November 2010
Chairman of Nomination Committee from 21
August 2015 (member from 1 July 2010)
from 25
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Mr Philip Baily BSc, MSc
(Non-executive Director) Age 72
Mr Baily is a metallurgist with more than
40 years’ experience in the mining industry,
including some 11 years in the uranium
sector. Throughout his career, he has
been involved in the design, construction,
commissioning and operation of mineral
processing plants, including two uranium
plants. Project locations have varied from
the deserts of Australia to the tropics of
Papua New Guinea and the high altitudes of
Argentina. He has extensive experience, at
senior management level, in the evaluation
of projects from grass roots development
to the acquisition of advanced projects and
operating companies. These projects have
been located throughout the world, many in
developing countries and environmentally
sensitive areas. Mr Baily holds a Bachelor
of Science and a Master of Science degree in
Metallurgy from the University of NSW.
Mr Baily was appointed to the Paladin Board
on 1 October 2010.
Special Responsibilities
Chairman of Sustainability Committee from
25 November 2010
Member of Nomination Committee from 1
October 2010
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Mr Wendong Zhang
(Non-executive Director) Age 47
Mr Zhang has over 25 years’ experience in
financial services and international capital
markets and was among the first generation
Chinese bankers on Wall Street working with
Morgan Stanley, UBS and Citi across New
York, Hong Kong and Beijing. He also co-
founded two boutique investment advisory
firms focusing on China opportunities. He has
completed a number of advisory, financing
and investment transactions and established
relationships with leading players in various
sectors
including conventional energy,
nuclear utilities and natural resources. Mr
Zhang graduated from Dartmouth College,
New Hampshire USA, in 1991 with a B.A. in
Engineering and Economics.
Mr Zhang was appointed to the Paladin Board
on 25 November 2014.
Special Responsibilities
Chairman of Remuneration Committee 21
August 2015 (member from 12 February
2015)
CHIEF EXECUTIVE OFFICER
Mr Alexander Molyneux Age 41 (appointed
10 August 2015)
BEc
Mr Molyneux
is an experienced natural
resources industry executive. He is Co-
Founder and Chairing Member of Azarga
Resources Group (2012 – present). Mr.
Molyneux currently serves as Non-Executive
Chairman of Azarga Metals Corp. (TSX-
V:AZR) (May 2016 – present) and Non-
Executive Director of Goldrock Mines Corp
(TSX-V:GRM) (2012 – present). He was
previously Executive Chairman of Azarga
Uranium Corp (TSX:AZZ) and its predecessor
(2012 – 2015) and CEO of
companies
SouthGobi Resources Limited
(Ivanhoe
Mines Group) (TSX:SGQ / HKEX:1878) (2009
– 2012). Prior to joining SouthGobi, Mr
Molyneux was Managing Director, Head of
Metals and Mining Investment Banking,
Asia Pacific, with Citigroup. In his position
as a specialist resources investment banker
he spent approximately 10 years providing
advice and investment banking services to
natural resources corporations.
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COMPANY SECRETARY AND EXECUTIVE
GENERAL MANAGER - CORPORATE
SERVICES
Ms Gillian Swaby Age 56 (resigned 21 August
2015) B.Bus, FCIS, FAICD
for
Ms Swaby has been involved in financial
and corporate administration
listed
companies, as both Director and Company
Secretary, covering a broad range of industry
sectors, for over 30 years. Ms Swaby
has extensive experience in the area of
secretarial practice, corporate governance,
management accounting and corporate and
financial management. In addition to her role
as Group Company Secretary, the divisions
of human resources, legal and corporate
social responsibility also fall under her
management in the role of EGM-Corporate
Services.
Ms Swaby is past Chair of the Western
Australian Council of Chartered Secretaries
of Australia, a former Director on their
National Board and a lecturer for the
Securities Institute of Australia. Ms Swaby
is the principal of a corporate consulting
company and was a member of the Paladin
Board for a period of 10 years. She is a
director of Australia-Africa Mining & Energy
Group (AAMEG).
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Mr Ranko Matic Age 48 (appointed 21 August
2015) B.Bus, CA
Mr Matic is a Chartered Accountant with over
25 years’ experience in the areas of financial
and executive management, accounting,
audit, business and corporate advisory. Mr
Matic serves as a Non-Executive Director and
Company Secretary for a number of publicly
listed natural resources companies.
BOARD AND COMMITTEE MEETINGS
The number of Directors’ meetings and meetings of committees held in the period each Director held office
during the financial year, and the number of meetings attended by each Director were:
Board of
Directors
Audit
Committee
Remuneration
Committee
Nomination
Committee
Sustainability
Committee
Name
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr Donald Shumka
Mr Peter Donkin
Mr Philip Baily
11
3
5
10
11
11
Mr Wendong Zhang
10
11
3
5
11
11
11
11
-
-
1
4
4
-
1
-
-
1
4
4
-
3
1
-
1
1
-
-
1
1
-
1
1
-
-
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
-
-
-
-
2
-
2
-
-
-
-
2
-
Of the above Board meetings, 4 were face to face with the remainder held via electronic means. The Board
meeting schedule also includes a scheduled conference call mid quarter between the face to face meetings.
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INTERESTS IN THE SECURITIES OF THE
COMPANY
SIGNIFICANT EVENTS AFTER THE
BALANCE DATE
As at the date of this report, the interests of the
Directors in the securities of Paladin Energy Ltd were:
Director
Paladin Shares
Share rights
(issued under the
Paladin Employee
Plan)
Mr Rick Crabb
5,981,528
Mr Donald Shumka
200,000
Mr Peter Donkin
Mr Philip Baily
22,500
18,000
Mr Wendong Zhang
1,180,000
Nil
Nil
Nil
Nil
Nil
RESIGNATION, ELECTION AND
CONTINUATION IN OFFICE OF DIRECTORS
In accordance with the Constitution of the Company,
Mr Rick Crabb and Mr Philip Baily will seek re-election
at the 2016 Annual General Meeting, following their
retirement by rotation.
PRINCIPAL ACTIVITY
The principal activity of the Group was the development
and operation of uranium mines in Africa, together
with global exploration and evaluation activities in
Africa, Australia and Canada.
REVIEW AND RESULTS OF OPERATIONS
A detailed operational and financial review of the
Group is set out on pages 10 to 41 of this report under
the section entitled Management Discussion and
Analysis.
The Group’s loss after tax for the year is US$122.0M
(2015: US$267.8M) representing a decrease of 54%
from the previous year.
DIVIDENDS
No dividend has been paid during the financial year
and no dividend is recommended for the current year.
Other than disclosed below, since the end of the year,
the Directors are not aware of any other matter or
circumstance not otherwise dealt with in this report,
that has significantly or may significantly affect
the operations of the Group, the results of those
operations or the state of affairs of the Group in
subsequent years with the exception of the following,
the financial effects of which have not been provided
for in the 30 June 2016 Financial Report:
Strategic Process Achieves Agreements to Raise Over
US$200M
On 21 July 2016 and 29 July 2016, the Company
announced the outcome of its strategic initiatives
process with respect to partnerships, strategic
investment, funding and corporate transactions, with
the result being two planned transactions to raise
in excess of US$200M. One pertains to a proposed
sale of 24% of Langer Heinrich Mine (LHM) and one
pertains to a potential sale of up to 75% of Manyingee
as set out below.
Sale of 24% of LHM
Paladin currently owns 75% of LHM and has signed
a non-binding terms sheet with CNNC Overseas
Uranium Holdings Ltd (COUH) (the existing 25%
minority shareholder of LHM), to sell it a 24%
interest in LHM. If it proceeds on its current terms,
the sale is expected to raise US$175M cash for
the Company and be accompanied by long-term
arrangements for uranium off-take. The proposed
transaction is subject to the parties negotiating and
executing definitive documentation, including: sale
and purchase agreement; shareholders agreement;
and documentation
the uranium off-take
arrangements. We have been advised by COUH
that any definitive agreement would also require
the approval of the board of COUH’s ultimate parent
company and third-party government and regulatory
approvals. Such approvals would include China
regulatory approvals customary for an international
transaction of the proposed size. Paladin is working
towards a formal close of the transaction in fourth
quarter of 2016 calendar year. Other than as set out
in this announcement, the other key terms of this
proposed transaction remain confidential.
for
SIGNIFICANT CHANGES IN THE STATE OF
AFFAIRS
On completion of the transaction, Paladin will
continue to hold 51% of LHM and be the operator.
There were no significant changes in the state of
affairs of the Group during the financial year not
otherwise dealt with in this report.
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Sale of 75% of Manyingee
Paladin currently owns 100% of Manyingee and has
signed a binding terms sheet with MGT Resources
Limited (MGT) for it to make a two-stage acquisition
of 75% of Manyingee (excluding Carley Bore).
On closing of the transaction, MGT will acquire a
30% initial interest in Manyingee for US$10M cash
and will form a joint-venture over the project with
Paladin (Manyingee JV). MGT will then have an option
to acquire an additional 45% of Manyingee JV from
Paladin for US$20M cash, exercisable for 12-months
following Manyingee JV’s preparation of a plan to
conduct a field leach trial for uranium extraction by
in-situ recovery method.
Under the terms of the agreement, MGT will issue
Paladin options to subscribe for new shares equivalent
to 5% of MGT’s shares outstanding for a period of
12-months from closing of the transaction at A$0.06
per share; and options to subscribe for new shares
equivalent to 5% of MGT’s shares outstanding for a
period of 24-months from closing of the transaction
at A$0.08 per share.
Paladin will issue MGT options to subscribe for
new shares equivalent to 2% of Paladin’s shares
outstanding for a period of 12-months from closing
of the transaction at A$0.35 per share; and options to
subscribe for new shares equivalent to 2% of Paladin’s
shares outstanding for a period of 24-months from
closing of the transaction at A$0.45 per share.
transaction
The
is conditional on definitive
documentation and a vote of MGT’s shareholders.
MGT’s directors have irrevocably agreed to vote in
favour.
LIKELY DEVELOPMENTS
Likely developments in the operations of the Group
constituted by the Company and the entities it controls
from time to time are set out under the section
entitled Management, Discussion and Analysis.
ENVIRONMENTAL REGULATIONS
The Group is subject to significant environmental
regulation in respect to its exploration, evaluation,
development and operational activities for uranium
projects under the laws of the countries in which its
activities are conducted. The Group currently has
mining and processing operations in Namibia and
Malawi (placed on care and maintenance in February
2014), as well as exploration projects in Australia, and
Canada. The Group’s Policy is to ensure compliance
with all applicable environmental laws and regulations
in the countries in which it conducts business.
64
regulations,
environmental
Specific
approvals
and licences for the exploration, development and
operation are required to conduct the activities at each
site. In addition, many other international and industry
standards are also applied to the Group’s activities,
including those specified for the global uranium
industry. These environmental laws, regulations and
standards relate to environmental factors such as
radiation, water, flora, fauna, air quality, noise, waste
management and pollution control.
The Directors are not aware of any environmental
matters which would have a significant adverse effect
on the Group.
REMUNERATION FOR THE YEAR AT A
GLANCE
Details of the remuneration received by the Key
Management Personnel are prepared in accordance
with statutory requirements and accounting standards,
and are detailed further in the Remuneration Report.
The disclosure below aims to provide an overall
picture of the group-wide remuneration platform
and not simply focus on Key Management Personnel.
Given the difficult business and operating conditions
which have persisted throughout the year, specifically
the continuing poor uranium price, and resulting
cash constraints that the Company faced during the
past year, with the exception of a small number of
employees who received adjustments for parity issues
seen within local labour markets, there were no
general salary increases granted across the Group.
• Paladin reduced its corporate staff by
approximately 60% during the September
quarter. No salary increases at the corporate
office.
• Ex-pat numbers at the Kayelekera Mine were
reduced by 50%.
• Number of Non-Executive Directors reduced
from five to four and the board reduced its
remuneration structure with an effective date of
1 July 2015. The base salary for Non-Executive
Directors was reduced by 57% from A$150,000
to A$65,000 and the Non-Executive Chairman by
59% from A$306,000 to A$125,000.
• A significant number of management personnel
agreed a further 10% reduction in salary in
addition to their original 10% reduction. This
20% reduction was not offset by any non-cash
compensation such as a choice of an issue of
share rights, additional leave or an option of
reduced working hours in salary.
• Cash bonuses totalling only US$19,000 were
paid across the Group this year.
PALADIN ENERGY LTD | ANNUAL REPORT 2016
• A focus on rationalisation and consolidation
of the workforce continued with a reduction
in overall headcount across the Group and
certain roles made redundant over the period.
Additionally, where natural attrition occurred,
only those roles deemed to be critical were
replaced.
• 8,052,500(1) Share Appreciation Rights (SARs)
were granted during the year.
• A total of 788,754 Share Rights vested during the
year (0.05% of issued capital). All were issued on
1 December 2014 as an offset to 10% reduction
in management personnel’s base salaries in
prior years.
• A total of 127,390 shares (0.01% of issued
capital) were issued on the vesting of 577,500
SARs during the year ended 30 June 2016. This
represents the conversion of SARs that vested
upon cessation of employment and which were
subsequently exercised.
• Long-term incentives on issue at balance date
comprise 3,000,000 Options (0.18% of issued
capital) and 7,125,000(1)(2) SARs.
[1] The number of ordinary shares ultimately issuable
upon vesting of the SARs will vary as the number of
ordinary shares to be issued is based upon Paladin’s
relative share price growth over the relevant vesting
periods.
[2] Based on the closing share price at 30 June 2016 of
A$0.185 no shares (0% of issued capital) would be
issuable.
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Executive Remuneration – cash value of earnings
realised (unaudited)
In keeping with the Company’s practice since 2011,
the tables below set out the cash value of earnings
realised by the Managing Director/CEO and other
executives considered to represent Key Management
Personnel (KMP) for 2016 and 2015 and the intrinsic
value of share-based payments that vested to the
executives during the period. This voluntary disclosure
is in addition and different to the disclosures required
by the Corporations Act and Accounting Standards,
particularly in relation to share rights. As a general
principle, the Accounting Standards require a value
to be placed on share rights based on probabilistic
calculations at the time of grant, which may be
reflected in the remuneration report even if ultimately
the share rights do not vest because vesting conditions
are not met. By contrast, this table discloses the
intrinsic value of share rights, which represents only
those share rights which actually vested and resulted
in shares issued to a KMP. The intrinsic value is the
Company’s closing share price on the date of vesting.
The Company believes that this additional information
is useful to investors as recognised by the 2009
Productivity Commission Inquiry Report ‘Executive
Remuneration
in Australia’. The Commission
recommended that remuneration reports should
include actual levels of remuneration received by the
individuals named in the report in order to increase
its usefulness to investors.
The cash value of earnings realised include cash
salary and fees, superannuation, cash bonuses and
other benefits received in cash during the year and
the intrinsic value of long-term incentives vesting
during the 2016 year. The tables do not include the
accounting value for share rights, share appreciation
rights and options granted in the current and prior
years, as this value may or may not be realised as
they are dependent on the achievement of certain
performance hurdles. The accounting value of other
long-term benefits which were not received in cash
during the year have also been excluded.
All cash remuneration is paid in Australian dollars to
those parties listed below (with the exception of Mr
A Molyneux and Mr D Garrow, who are paid in US$),
therefore the tables are presented in both A$ and US$
(being the functional and presentation currency of the
Company). The detailed schedules of remuneration
presented later in this report are presented in US$.
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
2016 (A$’000) / (US$’000)
Base Salary &
Superannuation
Retirement
Benefit(1)
Other
Total
Cash
Name
LTIP
1 Dec
2014(2)
Total
A$
US$
A$
US$
A$
US$
A$
US$
A$
US$
A$
US$
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Mr Alexander
Molyneux
-
-
Mr Craig Barnes
377
275
-
-
-
-
412(3)
299(3)
412
299
-
-
377
275
Mr John Borshoff(4)
1,041
757
1,353
985
293(5)
213(5)
2,687
1,955
Mr Dustin Garrow(6)
1,397
1,015
Ms Gillian Swaby
-
-
-
-
-
-
-
-
1,397
1,015
652(7)
475(7)
652
475
Total
2,815
2,047
1,353
985
1,357
987
5,525
4,019
-
-
-
55
39
94
-
-
-
40
29
412
299
377
275
2,687
1,955
1,452
1,055
691
504
69
5,619
4,088
Refer to the Compensation of Key Management Personnel table later in the Remuneration Report for
audited information required in accordance with the Corporations Act 2001 and its Regulations.
Exchange rate used is average for year US$1 =
A$1.37408.
[6] Mr Dustin Garrow retrenched effective 21 August
2015. Includes six months payment in lieu of notice,
severance pay and accrued annual leave.
[1] Payment of Retirement Benefit on completion of
[7] Ms Gillian Swaby resigned effective 21 August 2015.
the six month notice period provided for in services
contract upon resignation on 10 August 2015.
[2] Value of share rights granted on 1 December 2014
that either vested immediately and were held in
escrow to 1 December 2015, or vested on 1 December
2015 at a market price of A$0.225.
[3] Fees for services as CEO.
[4] Mr John Borshoff resigned effective 10 August 2015.
Includes payment of accrued annual leave.
[5] Accrued long service leave paid out on resignation.
Includes twelve months payment in lieu of notice. Fees
for Ms Gillian Swaby’s services as Group Company
Secretary and EGM – Corporate Services paid to a
company of which Ms Gillian Swaby is a director and
shareholder.
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2015 (A$’000) / (US$’000)
Name
Base Salary &
Superannuation
LTI(1)
Bonus
Other
Total
Cash
LTIP
5 Nov
2010(2)
LTIP
2 Apr
2012(3)
LTIP
15 Nov
2013(4)
Total
A$
US$
A$
US$
A$
US$
A$
US$
A$
US$
A$
US$
A$
US$
A$
US$
Mr John
Borshoff
Mr Dustin
Garrow
Ms Gillian
Swaby
Mr Mark
Chalmers
Mr Craig
Barnes
210(5)
175(5)
1,592
1,326
48
40
1,382
1,151
591
492
-
-
-
-
-
-
-
-
-
-
591
492
510(6)
425(6)
510
425
465
387
513
427
25(7)
21(7)
1,003
835
410
342
-
-
-
-
410
342
-
8
7
-
7
6
-
-
1,640
1,366
63
52
662
551
52
43
569
474
29
24
26
22
1,058
881
-
-
-
-
410
342
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-
-
-
-
-
-
-
Total
2,848
2,372
513
427
745
621
4,106
3,420
48
40
44
37
141
117
4,339
3,614
Refer to the Compensation of Key Management Personnel table later in the Remuneration Report for audited
information required in accordance with the Corporations Act 2001 and its Regulations.
Exchange rate used is average for year US$1 = A$1.20149.
[1] Payment of LTI retention bonus granted 1 January
[4] Value of share rights granted on 15 November
2012. Refer to page 72.
[2] Value of share rights granted on 5 November 2010
and vesting on 14 November 2014 at a market price of
A$0.38.
2013 that either vested immediately and were held
in escrow to 14 November 2014 or vested on 14
November 2014 at a market price of A$0.38.
[5] Represents 40 days accrued annual leave paid out.
[3] Value of share rights granted on 2 April 2012 and
[6] Fees for Ms Gillian Swaby’s services as Group
vesting on 1 September 2014 and 8 September 2014 at
a market price of A$0.38.
Company Secretary and EGM – Corporate Services
paid to a company of which Ms Gillian Swaby is a
director and shareholder.
[7] Mark Chalmers resigned on 30 June 2015. Represents
accrued annual leave paid out at 30 June 2015.
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REMUNERATION REPORT (AUDITED)
This Remuneration Report outlines the Director
and executive remuneration arrangements of the
Company and the Group in accordance with the
requirements of the Corporations Act 2001 (Cth) and
its Regulations. For the purposes of this report, Key
Management Personnel of the Group are defined as
those persons having authority and responsibility
for planning, directing and controlling the major
activities of the Group, directly or indirectly, including
any Director, whether executive or otherwise, of the
parent company.
Key Management Personnel comprise:
• Mr Rick Crabb, Non-executive Chairman
• Mr John Borshoff, Managing Director/CEO
(resigned 10 August 2015)
• Mr Alexander Molyneux, CEO (appointed 10
August 2015)
Having regard to the recommendations made by
the CEO, the Committee approves the quantum of
any short-term incentive bonus pool and the total
number of any long-term incentive grants to be made
and recommends the same for approval by the Board.
Individual awards are then determined by the CEO in
conjunction with senior management, as appropriate.
The remuneration for the CEO is determined by the
Remuneration Committee.
Any salary reviews and bonus payments are effective
from 1 January in the year.
KEY ELEMENTS OF KEY MANAGEMENT
PERSONNEL/EXECUTIVE REMUNERATION
STRATEGY
The overall focus of Paladin’s remuneration strategy
is to:
• provide competitive and fair reward;
• Mr Sean Llewelyn, Non-executive Director
• be flexible and responsive in line with market
(resigned 21 August 2015)
expectations;
• Mr Donald Shumka, Non-executive Director
• align Executive interests with those of the
• Mr Philip Baily, Non-executive Director
• Mr Peter Donkin, Non-executive Director
• Mr Wendong Zhang, Non-executive Director
• Ms Gillian Swaby, Group Company Secretary and
Executive General Manager – Corporate Services
(resigned 21 August 2015)
• Mr Dustin Garrow, Executive General Manager -
Marketing (resigned 21 August 2015)
• Mr Craig Barnes, Chief Financial Officer
For the purposes of this report, the term ‘Executive’
encompasses the CEO, senior executives, managers
and company secretary of the Parent and the Group.
REMUNERATION APPROVAL PROCESS
The Remuneration Committee
is charged with
assisting the Board by reviewing and making
appropriate recommendations on remuneration
packages for the CEO, Non-executive Directors
and senior executives.
it makes
recommendations on long-term incentive plans and
associated performance hurdles together with the
quantum of grants made, taking into account both the
individual’s and the Company’s performance.
In addition,
The Remuneration Committee, chaired by Mr Zhang,
held one meeting during the year. Messrs Crabb,
Shumka and Llewelyn are also Committee members.
The CEO is invited to attend those meetings which
consider the remuneration strategy of the Group and
recommendations in relation to senior executives.
Company’s shareholders; and,
• comply with applicable legal requirements and
appropriate standards of governance.
The above strategies also need to recognise the
economic situation of the Group given the prevailing
uranium prices.
This strategy applies group wide for all employees.
Information
in relation to the compensation of
Non-executive Directors is detailed later in this
Remuneration Report.
takes
The overall
into
level of compensation
account the Company’s earnings and growth in
shareholder wealth of the Company together with
the achievement of strategic goals but must also
reflect current economic conditions. Consideration
of the Company’s earnings will be more relevant as
the Company matures from its development and
consolidation phase to profitability which is of course
highly dependent on prevailing uranium prices.
Due to continued poor uranium prices, the Company
has taken significant steps to reduce the remuneration
for all Key Management Personnel/Executives.
The Board is cognisant of general shareholder concern
that long-term equity-based remuneration be linked
to Company performance and growth in shareholder
value. SARs issued under the LTI programme have a
one to three-year performance period. These SARs
will only vest at the end of a one to three-year period.
If a Key Management Personnel/Executive resigns
during this period, they will ordinarily forfeit their
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shares. This promotes a focus on long-term performance as the value of the shares is linked to the ongoing
performance of the Company. This period represents an appropriate balance between providing a genuine and
foreseeable incentive to Key Management Personnel/Executives and fostering a long-term view of shareholder
interests.
The table below compares the earnings per share to the closing share price for the Company’s five most
recently completed financial years.
30 June 2012
30 June 2013
30 June 2014
30 June 2015
30 June 2016
EPS
US$(0.21)
US$(0.49)
US$(0.33)
US$(0.19)
US$(0.07)
Share Price
A$1.25
A$0.88
A$0.29
A$0.245
A$0.185
The remuneration structure for the Key Management Personnel/Executives has three elements:
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• fixed remuneration;
• short-term variable remuneration; and,
• long-term incentives.
These are detailed as follows:
Remuneration Component
Elements
Details
Annual base salary determined as at 1
January each year
The ‘not at risk’ cash component which may
include certain salary sacrifice packaging.
Statutory superannuation contributions
Statutory % of base salary.
Fixed Remuneration
Expatriate benefits
Foreign assignment allowance
Short-term incentive, paid as a cash
bonus
Long-term incentive, granted under the
Rights Plan
Variable Performance Linked
Remuneration
(“at risk” remuneration)
Executives who fulfil their roles as an expatriate
may receive benefits including relocation costs,
health insurance, housing and car allowances,
educational fees and tax advisory services.
An additional % of base salary is payable in
relation to foreign assignments being 15% for
Malawi and 10% for Namibia.
Rewards Executives for performance over a
short period, being the year ending 31 December.
Bonuses are awarded at the same time as the
salary reviews. Assessment is based on the
individual’s performance and contribution to team
and Company performance.
Award determined in the September quarter of
each year, based on individual performance and
contribution to team and Company performance.
Vesting dependent on creation of shareholder
value over a one to three-year period, together
with a retention element.
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Fixed Remuneration
industry,
This is reviewed annually with consideration given to
both the Company and the individual’s performance
and effectiveness. Market data, focused on the
mining
is analysed with a focus on
maintaining parity or above with companies of similar
complexity and size operating in the resources sector
and becoming an employer of choice. The Company
did not engage remuneration consultants, however it
subscribes to a number of remuneration surveys and
reports including Boardroom Remuneration Review
(Connect 4), and AUSREM. The Company also takes
into consideration the annual publication, Executive
and Board Remuneration Report produced by Ernst
& Young.
Despite the challenging economic times,
local
reviews against industry salary benchmarks were
undertaken and in instances where there were parity
issues, adjustments were made accordingly as part
of the effort to maintain a competitive remuneration
structure. There were no salary increases at the
corporate office.
Short-term Incentives
The Company provides short-term
incentives
comprising a cash bonus to Executives of up to 30% of
base salary. The bonus is entirely discretionary with
the goal of focusing attention on short-term strategic
and financial objectives. The amount is dependent on
the Company’s performance in its stated objectives
and the individual’s performance, together with the
individual’s position and level of responsibility. This
component is an “at risk” component of overall
remuneration designed to encourage exceptional
performance whilst adhering to the Company values.
Specific targets for individuals have not been set due
to the philosophy of achieving a common goal for the
Company, however, the following measures are taken
into account where these are applicable to the Key
Management Personnel and individual Executives
and have been selected to align their interests to
those of shareholders:
• health, safety and environmental performance;
• production performance;
• project development performance;
• additional uranium resources delineated;
• performance of the Company in meeting its
various other objectives;
• financial performance of the Company; and
• such other matters determined by the
Remuneration Committee in its discretion.
The above must, however, be viewed in the context of
the operating environment and the priorities in terms
of the allocation and preservation of cash.
Given the priority of cost reduction and cash
conservation with the uranium industry continuing
to experience difficult times, cash bonuses totalling
only US$19,000 were paid across the Group this year
(FY2015 US$Nil).
The expectation is that short-term incentives will
not be reinstated until such time as the operating
environment improves and, at that time, a more
structured
incentive programme linked both to
individual and corporate performance will be
implemented.
CEO
A success fee of up to 100% of base salary can be
achieved under the terms of his contract, having
consideration to operational, financial, environmental
and health and safety outcomes achieved during the
calendar year as determined by the Remuneration
Committee. For the calendar year 2015 no success
fee was awarded in line with the philosophy applying
to all staff referred to earlier.
Mr. Molyneux will be entitled to the full amount of
the success fee plus an additional success fee of
US$225,000 in the event that during the current
calendar year a transaction results in a change of
material influence, being:
(a) approximately 20% or more equity issuance to a
party which is not an existing shareholder, with rights
of director appointments;
(b) a change of control (defined as greater than a 50%
change in Paladin Energy Ltd shareholding); or
(c) sale of a material asset or assets, requiring
shareholder approval, with such success fee only
pertaining to transactions that are recommended by
the board of directors.
Any success fee payable, relating to the 2016 calendar
year, would be paid out in CY2017.
Long-term Incentives
The Company believes that encouraging its employees
to become shareholders is the best way of aligning
their interests with those of its shareholders. In 2009,
the Company implemented an Employee Performance
Share Rights Plan (the Rights Plan) together with
a Contractor Performance Share Rights Plan (the
Contractor Rights Plan). These plans are referred
to jointly as the Rights Plans and were reaffirmed by
shareholders at the 2015 Annual General Meeting.
The Rights Plans are long-term incentive plans aimed
at advancing the interests of the Company by creating
a stronger link between employee performance and
reward and increasing shareholder value by enabling
participants to have a greater involvement with, and
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share in, the future growth and profitability of the
Company. They are an important tool in assisting to
attract and retain talented people.
SARs are granted under the plan for no consideration.
SARs are a right to receive a bonus equal to the
appreciation in the company’s share price over a
period. SARs benefit the holder with an increase
in share price; the holder is not required to pay the
exercise price, but rather just receives the amount
of the increase in shares. The number of ordinary
shares ultimately issuable upon vesting of the SARs
will vary as the number of ordinary shares to be issued
is based upon Paladin’s relative share price growth
over the relevant vesting periods. SARs granted
under the FY16 LTI Offer were granted in 3 tranches
and will only vest if the holder remains employed at
the relevant vesting dates (1 November 2016, 2017
and 2018).
The number of share rights able to be issued under
the Plans is limited to 5% of the issued capital. The
5% limit includes incentive grants under all plans
made in the previous 5 years (with certain exclusions
under the Australian corporate legislation). This
percentage now stands at 0.4%.
The Board is cognisant of general shareholder
concern that long-term equity-based rewards should
be linked to the performance of the Company. The
holder of a SAR only receives an amount equivalent
to the share price increase (i.e. the net appreciation
amount, which is the market price on exercise date
minus market price on grant date) in shares.
The Company does not offer any loan facilities to
assist in the purchase of shares by employees.
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The CEO was granted 3,000,000 options upon appointment, on 10 August 2015, as follows:-
Date granted
Exercisable date
Expiry date
Exercise price
Number
10 August 2015
10 August 2015
10 August 2018
A$0.20
1,000,000
10 August 2015
8 November 2015
8 November 2018
A$0.30
1,000,000
10 August 2015
23 December 2015
23 December 2018
A$0.40
1,000,000
Total
3,000,000
Cessation of Employment
Under the Rights Plan, employees’ SARs will be
cancelled on cessation of employment, unless
special circumstances exist such as retirement,
total and permanent disability, redundancy or death.
Contractors will have their SARs cancelled, other
than on death at which point the contractor’s legal
representative will be entitled to receive them.
The options issued to the CEO have different exercise
prices and provide a direct link between the CEO’s
reward and shareholder return, and provide a clear
line of sight between CEO performance and Company
performance.
Shares Acquired Under the Rights Plan
Shares to be allocated to participants on vesting are
currently issued from equity. No consideration is
paid on the vesting of the share rights and resultant
shares carry full dividend and voting rights.
Change of Control
All SARs will vest on a change of control event. The
Remuneration Committee considers that this is
appropriate given that shareholders (or a majority
thereof) would have collectively elected to accept a
change of control event. Moreover the number of
SARs relative to total issued shares is very insignificant
(0.4%) and thus are not considered a disincentive to a
potential bidder.
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Share Appreciation Rights at 30 June 2016
Date granted
Exercisable date
Expiry date
Fair value
Exercise price
Number
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20 October 2015
1 November 2016
1 November 2021
20 October 2015
1 November 2017
1 November 2022
20 October 2015
1 November 2018
1 November 2023
3 March 2016
1 November 2016
1 November 2021
3 March 2016
1 November 2017
1 November 2022
3 March 2016
1 November 2018
1 November 2023
Total
A$0.13
A$0.13
A$0.13
A$0.10
A$0.10
A$0.10
In summary, this balance represents 0.4% of the issued capital.
A$0.20
3,255,000
A$0.20
1,627,500
A$0.20
1,627,500
A$0.20
307,500
A$0.20
153,750
A$0.20
153,750
7,125,000
Retention Programme
The
the
remaining balance/second grant of
programme was paid on 1 January 2015. No further
grants have been made and no balance is outstanding/
payable.
KEY ELEMENTS OF NON-EXECUTIVE
DIRECTOR REMUNERATION STRATEGY
The focus of the remuneration strategy is to:
• Attract and retain talented and dedicated
directors.
• Remunerate appropriately to reflect the:
◦ size of the Company;
◦ the nature of its operations;
◦ the time commitment required; and,
◦ the responsibility the Directors carry.
COMPONENTS OF NON-EXECUTIVE
DIRECTOR REMUNERATION
In accordance with corporate governance principles,
Non-executive Directors are remunerated solely
by way of fees and statutory superannuation. The
aggregate annual remuneration permitted to be paid
to Non-executive Directors is A$1.2M (US$1.0M) as
approved by shareholders at the 2008 AGM. Fees
paid for the year to 30 June 2016 total A$361,000
(US$262,721). The Board adjusted its remuneration
structure with an effective date of 1 July 2015. The
revised structure reduced the base salary for Non-
Executive Directors from A$150,000 (US$109,164)
to A$65,000 (US$47,304) and the Non-Executive
Chairman from A$306,000 (US$222,694) to A$125,000
(US$90,970).
Remuneration Component
Elements
Base Fee
Must be contained within aggregate limit
Details
(per annum)
Chairman
A$125,000 (US$90,970)
Non-executive Director
A$65,000 (US$47,304)
Paid to the Chairman of the Audit Committee
A$15,000 (US$10,916)
Committee Fees
Paid to the Chairman of the Nomination Committee
A$5,000 (US$3,639)
Paid to the Chairman of the Sustainability Committee
A$5,000 (US$3,639)
Superannuation
Statutory contributions are included in the fees set out above
Statutory % of fees
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The following graph is provided to give a clearer understanding of the Non-executive Directors’ remuneration.
0
0
0
,
A
$
m
u
n
n
a
r
e
p
1,200,000
1,000,000
800,000
600,000
400,000
200,000
Maximum Fee Cap $1.2M
156
156
156
175
317
150
150
150
168
306
[1] D Shumka-includes A$15,000 in relation to Audit Committee Chair Fees
2014
2015
P Baily
P Donkin
S Llewelyn
D Shumka1
Chairman
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70,000
70,000
22,567
80,000
118,333
2016
Other Fees/Benefits
In addition, the Company’s Constitution provides
for additional compensation to be paid if any of the
Directors are called upon to perform extra services or
make any special exertions on behalf of the Company
or the business of the Company. The Company may
compensate such Director in accordance with such
services or exertions, and such compensation may
be either in addition to or in substitution for the
Directors’ fees referred to above. No additional fees
were paid during the year, other than the Directors’
fees disclosed.
for reasonable expenses
Non-executive Directors are also entitled to be
reimbursed
incurred
whilst engaged on Company business. There is no
entitlement to compensation on termination of non-
executive directorships. Non-executive Directors do
not earn retirement benefits (other than the statutory
superannuation) and are not entitled to any form of
performance linked remuneration.
Rotation of Directors
Mr Rick Crabb and Mr Philip Bailey will seek re-
election at the 2016 Annual General Meeting, following
their retirement by rotation.
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Compensation of Key Management Personnel for the Year Ended 30 June 2016 of the Group
Short-Term Benefits
Post
Employment
Long-Term
Benefits
Salary
& fees
Cash
bonus
Other
Comp-
any
Benefits
Other
Super-
annuation
Retire-
ment
Benefits
Long-
Term
Incentive
Plan
Long
Service
Leave
Share-
Based
Pay-
ment*
Share
Rights
Total
Total
Total
Perfor-
mance
Related
Total
Perfor
-mance
Related
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
A$’000
US$’000
%
Directors
Mr Rick Crabb
79
Mr John Borshoff(1)
502
Mr Sean Llewelyn(4)
Mr Donald Shumka
Mr Philip Baily
Mr Peter Donkin
15
58
47
47
Subtotal
748
Key Management
Personnel
Mr Alexander
Molyneux
-
Mr Craig Barnes
261
Ms Gillian Swaby
-
Mr Dustin Garrow(7)
962
Subtotal
Total
1,223
1,971
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
299(5)
-
475(6)
-
774
774
7
-
11
(182)(2)
1
-
4
4
-
-
-
-
27
(182)
-
14
-
-
14
41
-
-
-
-
-
(182)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(17)(3)
-
-
-
-
(17)
-
-
-
(92)(8)
-
-
-
-
-
-
-
86
118
314
431
16
58
51
51
23
80
70
70
576
792
-
-
-
-
-
-
-
-
-
-
-
-
-
104
403
554
104
25.7
36
311
427
36
11.7
-
-
475
652
870
1,197
(92)
140
2,059
2,830
(109)
140
2,635
3,622
-
-
-
-
-
-
Notes to the Compensation Table
Presentation Currency - The compensation table has been presented in US$, the Company’s functional and presentation
currency. The A$ value has also been shown as this is considered to be the most relevant comparator between years,
given that in 2016 more than 57% of KMP’s contracts for services were denominated in A$ and this eliminates the effects
of fluctuations in the US$ and A$ exchange rate. Exchange rate used is average for year US$ 1 = A$1.37408
[1] Mr John Borshoff resigned on 10 August 2015.
[5] Represents fees paid for services as CEO.
[2] Amounts previously accrued for Mr Borshoff’s retirement
benefit in previous years were paid to Mr Borshoff on
completion of the six month notice period provided for
in Services Contract upon resignation. The accounting
credit has arisen due to the reduction in Mr Borshoff’s
base salary that resulted in the final payment being lower
than the amount accrued and disclosed in previous years.
[3] Amounts previously accrued for Mr. Borshoff’s long
service leave in previous years were paid to Mr Borshoff
on completion of the six month notice period. The
accounting credit has arisen due to the reduction in Mr
Borshoff’s base salary that resulted in the final payment
being lower than the amount accrued and disclosed in
previous years.
[4] Mr Sean Llewelyn resigned on 21 August 2015.
[6] Ms Gillian Swaby resigned on 21 August 2015. Includes
twelve months payment in lieu of notice. Represents
fees for Ms Gillian Swaby’s services as Group Company
Secretary and EGM – Corporate Services, paid to a
company of which Ms Gillian Swaby is a director and
shareholder.
[7] Mr Dustin Garrow retrenched on 21 August 2015.
Includes six months payment in lieu of notice and
severance pay.
[8] Amounts previously accrued for Mr Garrow’s long service
leave in previous years. The accounting credit has arisen
as number of years’ service requirement was not satisfied
upon retrenchment.
*A reconciliation of this figure in A$ follows to enable a
clearer understanding of how this number is calculated.
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Reconciliation of Share-Based Payment Compensation of Key Management Personnel for the year
ended 30 June 2016 of the Group.
Options(1)
granted 10 August 2015
(exercisable CY2015)
Share Appreciation Rights
granted 20 October 2015
(exercisable CY2016 to CY2018)
Total
Share-Based
Payment
Executives
A$’000
US$’000
A$’000
US$’000
A$’000
US$’000
Mr Alexander Molyneux
Mr Craig Barnes
Total
142
-
142
104
-
104
-
50
50
-
36
36
142
50
192
104
36
140
It should be noted that service or performance vesting conditions are attached to all of the options and
share appreciation rights referred to above. These are detailed elsewhere in this report.
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Exchange rate used as the average for year US$1 = A$1.37408.
[1] Options granted on appointment as CEO on 10 August 2015.
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Compensation of Key Management Personnel for the Year Ended 30 June 2015 of the Group
Short-Term Benefits
Post
Employment
Long-Term
Benefits
Salary
& fees
Cash
bonus
Other
Company
Benefits
Other
Super-
annuation
Retire-
ment
Benefits
Long-Term
Incentive
Plan
Long
Service
Leave
Total
Total
Total
Perfor-
mance
Related
Total
Perfor-
mance
Related
Share-
Based
Pay-
ment*
Share
Rights
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
A$’000
US$’000
%
Directors
Mr Rick Crabb
239
Mr John Borshoff
1,310(1)
Mr Sean Llewelyn
Mr Donald Shumka
Mr Philip Baily
114
140
114
Mr Peter Donkin
114
Subtotal
2,031
Key Management
Personnel
Ms Gillian Swaby
Mr Dustin Garrow
-
492
Mr Mark Chalmers
392(4)
Mr Craig Barnes
326
Subtotal
Total
1,210
3,241
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
425(3)
-
-
-
425
425
16
-
16
(468)(2)
11
-
11
11
65
-
-
16
16
32
-
-
-
-
(468)
-
-
-
-
-
97
(468)
-
-
-
-
-
-
-
-
-
70
-
70
70
-
63
-
-
-
-
-
56
-
-
-
-
255
306
-
-
977
1,174
56
5.8
125
150
140
168
125
150
125
150
-
-
-
-
63
56
1,747
2,098
56
-
9
-
-
9
49
68
32
-
474
569
569
683
510
614
342
410
149
1,895
2,276
2
2
2
-
6
72
205
3,642
4,374
62
-
-
-
-
0.4
0.3
0.5
-
Notes to the Compensation Table
Presentation Currency - The compensation table has been presented in US$, the Company’s functional and presentation
currency. The A$ value has also been shown as this is considered to be the most relevant comparator between years,
given that in 2015 more than 90% of KMP’s contracts for services were denominated in A$ and this eliminates the effects
of fluctuations in the US$ and A$ exchange rate. Exchange rate used is average for year US$ 1 = A$1.20149.
[1] Includes 40 days annual leave paid out.
[2] This is the amount required to be accrued in 2015 for
the payment at a future date (as yet undetermined) of
a retirement benefit to Mr Borshoff under the terms of
his Services Contract. The credit has arisen due to the
reduction in Mr Borshoff’s base salary.
[3] Represents fees for Ms Gillian Swaby’s services as
Group Company Secretary and EGM – Corporate
Services, paid to a company of which Ms Gillian Swaby
is a director and shareholder.
[4] Mark Chalmers resigned on 30 June 2015. Includes
annual leave paid out at 30 June 2015.
* A reconciliation of this figure in A$ follows to enable a
clearer understanding of how this number is calculated.
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Reconciliation of Share-Based Payment Compensation of Key Management Personnel for the year ended
30 June 2015 of the Group.
Share Rights
granted 5 November
2010 (vesting CY2011
to CY2014)
Share Rights
granted 2 April 2012
(vesting CY2012 to
CY2014)
Share Rights
granted 1 December
2014(1)
(vesting CY2014 to
CY2015)
Total
Share-Based
Payment
Directors
A$’000
US$’000
A$’000
US$’000
A$’000
US$’000
A$’000
US$’000
Mr John Borshoff
Subtotal
Executives
Ms Gillian Swaby
Mr Dustin Garrow
Mr Mark Chalmers
Subtotal
Total
68
68
-
-
-
-
56
56
-
-
-
-
68
56
-
-
4
4
-
-
3
3
11(2)
10(2)
19
19
16
16
-
-
55
77
27
159
159
-
-
46
65
22
133
133
68
68
59
81
38
178
246
56
56
49
68
32
149
205
It should be noted that time or performance vesting conditions are attached to all of the share rights referred
to above. These are detailed elsewhere in this report.
Exchange rate used as the average for year US$1 = A$1.20149.
[1] Share rights granted as an allocation to offset 10% reduction in management personnel base salaries and fees.
[2] Includes A$6,000/US$5,000 relating to 50,000 time-based shares negotiated as a sign-on bonus to assist in
attracting quality personnel
Options Holdings of Key Management Personnel (Group)
30 June 2016
01 Jul 15
Granted as
remuneration
Fair value at
grant date(1)
Vested as shares
Lapsed
30 Jun 16
number
number
US$’000
number
number
number
Executives
Mr Alexander Molyneux
Total
-
-
3,000,000
3,000,000
142
142
-
-
-
-
3,000,000
3,000,000
Granted 10 August 2015.
[1] Fair value per option at grant date was US$0.05.
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Share Appreciation Rights Holdings of Key Management Personnel (Group)
30 June 2016
01 Jul 15
Granted as
remuneration
Fair value at
grant date
Vested as shares
Lapsed
30 Jun 16
number
number
US$’000
number
number
Number
Executives
Mr Craig Barnes
Total
-
-
800,000
800,000
77
77
-
-
-
-
800,000
800,000
Granted 20 October 2015.
Fair value per right at grant date was US$0.10.
Share Rights Holdings of Key Management Personnel (Group)
30 June 2016
01 Jul 15
Granted as
remuneration
Fair value at
grant date
Vested as shares
Lapsed
30 Jun 16
number
number
US$
number
number
Number
Executives
Mr Dustin Garrow
Total
245,582
245,582
-
-
-
-
(245,582)
(245,582)
-
-
-
-
No other Key Management Personnel held share rights during the year ended 30 June 2016.
Issued 1 December 2014 pursuant to 10% salary sacrifice. Time based vesting on 1 December 2015.
Shares held in Paladin Energy Ltd (number)
30 June 2016
Balance
01 Jul 15
On Vesting
of Rights
Net Change Other
Balance
30 June 16
Directors
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr Donald Shumka
Mr Peter Donkin
Mr Philip Baily
5,981,528
22,694,905
150,000
200,000
22,500
18,000
-
-
-
-
-
-
-
(22,694,905) (2)
(150,000) (3)
-
-
-
-
Mr Wendong Zhang
1,180,000
Executives
Ms Gillian Swaby
Mr Dustin Garrow
748,411
121,000
-
(748,411) (3)
245,582 (1)
(366,582) (3)
-
5,981,528
-
-
200,000
22,500
18,000
1,180,000
-
-
Total
31,116,344
245,582- -
(23,959,898)
7,402,028
No other Key Management Personnel held shares during the year ended 30 June 2016.
[1] Issued 1 December 2014 pursuant to 10% salary sacrifice. Time based vesting on 1 December 2015.
[2] Resigned on 10 August 2015.
[3] Resigned on 21 August 2015.
78
PALADIN ENERGY LTD | ANNUAL REPORT 2016
All equity
transactions with Key Management
Personnel have been entered into under terms and
conditions no more favourable than those the Group
would have adopted if dealing at arm’s length.
Other Transactions and Balances with Key
Management Personnel.
Fees paid in the normal course of business in 2016
for Ms Gillian Swaby’s services as Group Company
Secretary and EGM – Corporate Services totalling
US$475,000 (2015: US$425,000) were paid/payable
(balance outstanding at 30 June 2016 and included in
trade creditors US$Nil (2015: US$Nil)) to a company of
which Ms Gillian Swaby is a director and shareholder.
All amounts are excluding GST.
CONTRACTS FOR SERVICES
Remuneration and other terms of employment for the
Key Management Personnel are normally formalised
in contracts for services.
All contracts with Key Management Personnel may
be terminated early by either party providing between
three to twelve months written notice or providing
payments in lieu of the notice period (based on fixed
component of remuneration). On termination notice
by the Company, any rights that have vested, or that
will vest during the notice period, will be released.
Rights that have not yet vested will be forfeited.
Mr Alexander Molyneux, Chief Executive Officer (Appointed 10 August 2015)
Appointed as Interim CEO for a period of 6 months at a monthly fee of US$25,000 with a notice period of 2
months.
Granted 3,000,000 options.
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Date granted
Exercisable date
Expiry date
Exercise price
Number
10 August 2015
10 August 2015
10 August 2018
A$0.20
1,000,000
10 August 2015
8 November 2015
8 November 2018
A$0.30
1,000,000
10 August 2015
23 December 2015
23 December 2018
A$0.40
1,000,000
Total
3,000,000
Termination – Mr. Molyneux’s engagement may be
terminated by either party at any time by six months’
notice. However, in the case of termination by the
Company within 12-months following a change of
control, the Company must give 12-months’ notice.
Mr Craig Barnes, Chief Financial Officer
Term of agreement – no fixed term.
Base salary,
inclusive of superannuation of
A$410,000. 1 September 2015, 10% reduction in
salary to A$371,000.
No termination benefit is specified in the agreement.
Notice period six months.
16 February 2016 appointed as CEO
Monthly fee – US$32,000.
Success fee – Up to 100% of base salary. Payable
having consideration
financial,
environmental and health and safety outcomes
achieved during the calendar year as determined by
the Remuneration Committee.
to operational,
Change of material influence – Mr. Molyneux will be
entitled to the full amount of the success fee plus an
additional success fee of US$225,000 in the event
that during the current calendar year a transaction
results in a change of material influence, being: (a)
approximately 20% or more equity issuance to a party
which is not an existing shareholder, with rights
of director appointments; (b) a change of control
(defined as greater than a 50% change in Paladin
Energy Ltd shareholding); or (c) sale of a material
asset or assets, requiring shareholder approval, with
such success fee only pertaining to transactions that
are recommended by the board of directors.
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Mr John Borshoff, Managing Director/CEO (Resigned
effective 10 August 2015)
Mr Dustin Garrow, Executive General Manager -
Marketing (Resigned effective 21 August 2015)
Term of agreement – 27 November 2013 to 31
December 2014, extended for a further 2 years to 31
December 2016 on the same terms and in accordance
with the original agreement.
Base salary, inclusive of superannuation, A$1,533,600.
Further 10% reduction in salary to A$1,382,000.
Three months long service leave after five years
continual service.
Payment of a benefit on retirement or early termination
by the Company, other than for gross misconduct,
equal to one year’s average base salary over the three
years immediately preceding the termination date.
Notice period three months.
Ms Gillian Swaby, Group Company Secretary and
Executive General Manager – Corporate Services
(Resigned effective 21 August 2015)
Term of agreement – no fixed term.
Base salary, of US$683,385. 10% reduction in salary
and 20% reduction in time to US$492,037 offset with
an allocation of 245,582 share rights on 1 December
2014.
No termination benefit is specified in the agreement.
Notice period six months.
Remuneration for all parties referred to above
includes provision of an annual discretionary bonus
and initial and ongoing discretionary participation in
the Company’s long-term incentive plans.
Share Rights Vested as Shares - Key Management
Personnel (Group)
30 June 2016
Vested as shares
Fees are paid in the ordinary course of business for Ms
Gillian Swaby’s services as Group Company Secretary
and EGM – Corporate Services to a company of which
Ms Gillian Swaby is a director and shareholder.
Executives
Mr Dustin Garrow
Total
245,582(1)
245,582(2)
Consultancy agreement with no fixed term.
Annual fee A$567,000. 10% reduction in fees to
A$510,300 offset with an allocation of 174,529 share
rights on 1 December 2014.
Notice period twelve months.
No termination benefit is specified in the agreement.
[1]
Issued 1 December 2014 pursuant to 10% salary sacrifice.
Time based vesting on 1 December 2015.
[2] All shares issued for nil consideration.
END OF AUDITED REMUNERATION REPORT
SHARE RIGHTS
No Share Rights outstanding at the date of this report.
788,754 shares were issued on the vesting of Share Rights during the year ended 30 June 2016.
OPTIONS
The outstanding balance of Options at the date of this report are as follows:
Date granted
Exercisable date
Expiry date
Fair value
Exercise price
Number
10 August 2015
10 August 2015
10 August 2018
10 August 2015
8 November 2015
8 November 2018
10 August 2015
23 December 2015
23 December 2018
A$0.07
A$0.06
A$0.06
Total
A$0.20
1,000,000
A$0.30
1,000,000
A$0.40
1,000,000
3,000,000
No shares were issued on the exercise of Options during the year ended 30 June 2016.
80
PALADIN ENERGY LTD | ANNUAL REPORT 2016
SHARE APPRECIATION RIGHTS
The outstanding balance of Share Appreciation Rights at the date of this report are as follows:
Date granted
Exercisable date
Expiry date
Fair value
Exercise price
Number
20 October 2015
1 November 2016
1 November 2021
20 October 2015
1 November 2017
1 November 2022
20 October 2015
1 November 2018
1 November 2023
3 March 2016
1 November 2016
1 November 2021
3 March 2016
1 November 2017
1 November 2022
3 March 2016
1 November 2018
1 November 2023
Total
A$0.13
A$0.13
A$0.13
A$0.10
A$0.10
A$0.10
A$0.20
3,255,000
A$0.20
1,627,500
A$0.20
1,627,500
A$0.20
307,500
A$0.20
153,750
A$0.20
153,750
7,125,000
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Conversion of SARs that vested upon cessation of employment and which were subsequently exercised.
127,390 shares were issued on the vesting of 577,500 SARs during the year ended 30 June 2016.
DIRECTORS’ INDEMNITIES
During the year the Company has incurred premiums to insure the Directors and/or officers for liabilities
incurred as costs and expenses that may be incurred in defending civil or criminal proceedings that may be
brought against the officers in their capacity as officers of the Company and or its controlled entities. Under
the terms and conditions of the insurance contract, the nature of liabilities insured against and the premium
paid cannot be disclosed.
INDEMINIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of
the terms of its audit engagement agreement against claims by third parties arising from the audit (for an
unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial
year.
ROUNDING
The amounts contained in this report, the Financial Report and the Management, Discussion and Analysis
have been rounded to the nearest US$100,000 (where rounding is applicable) under the option available to
the Company under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191. The
Company is an entity to which the Instrument applies.
AUDITOR
Ernst & Young were appointed auditors for the Company on 21 June 2005, which was approved by shareholders
at the 2005 Annual General Meeting on 9 November 2005.
81
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AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
The Directors received the following declaration from the auditor of Paladin Energy Ltd.
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NON-AUDIT SERVICES
The following non-audit and assurance services were
provided by the Company’s auditor, Ernst & Young.
The Directors are satisfied that the provision of non-
audit and assurance services is compatible with
the general standard of independence for auditors
imposed by the Corporations Act. The nature and
scope of each type of non-audit and assurance service
provided means that auditor independence was not
compromised.
Ernst & Young received or are due to receive the
following amounts for the provision of non-audit
services:
Other services
Tax compliance services
International tax consulting
Other tax advice
Total
US$’000
15
30
26
67
138
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Signed
Directors.
in accordance with a resolution of the
Rick Crabb
Chairman
Perth, Western Australia
24 August 2016
83
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PALADIN ENERGY LTD AND
CONTROLLED ENTITIES
FINANCIAL REPORT
FOR THE YEAR ENDED 30 JUNE 2016
EXPRESSED IN US DOLLARS
CONTENTS
Consolidated Income Statement ...........................................................................85
Consolidated Statement of Comprehensive Income .............................................86
Consolidated Statement of Financial Position ......................................................87
Consolidated Statement of Changes in Equity ......................................................88
Consolidated Statement of Cash Flows ................................................................90
Notes to the Consolidated Financial Statements .................................................91
84
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2016
Revenue
Cost of sales
Impairment – inventories
Gross profit
Other income
Exploration and evaluation expenses
Administration, marketing and non-production costs
Other expenses
Loss before interest and tax
Finance costs
Net loss before income tax
Income tax benefit
Net loss after tax
Attributable to:
Non-controlling interests
Members of the parent
Net loss after tax
Loss per share (US cents)
Notes
2016
US$M
2015
US$M
11
12
17
12
22
12
12
12
13
185.4
(152.5)
(19.2)
13.7
9.2
(0.9)
(16.3)
(185.4)
(179.7)
(48.1)
(227.8)
83.4
(144.4)
(22.4)
(122.0)
(144.4)
199.5
(189.7)
(8.0)
1.8
5.5
(1.6)
(19.3)
(267.6)
(281.2)
(57.0)
(338.2)
38.1
(300.1)
(32.3)
(267.8)
(300.1)
Loss after tax from operations attributable to ordinary equity
holders of the Company
– basic and diluted (US cents)
14
(7.1)
(18.9)
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2016
Net loss after tax from operations
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Net loss on available-for-sale financial assets
Transfer of realised gains to other income on disposal of available-for-sale financial
assets
Transfer of impairment loss on available-for-sale financial assets to income statement
Foreign currency translation
Income tax on items of other comprehensive income
Items that will not be subsequently reclassified to profit or loss:
2016
US$M
2015
US$M
(144.4)
(300.1)
(1.1)
-
1.5
(12.2)
0.3
(3.7)
(0.4)
2.9
(99.2)
(0.6)
Foreign currency translation attributable to non- controlling interests
-
(5.6)
Other comprehensive loss for the year, net of tax
Total comprehensive loss for the year
Total comprehensive loss attributable to:
Non-controlling interests
Members of the parent
(11.5)
(155.9)
(22.4)
(133.5)
(155.9)
(106.6)
(406.7)
(37.9)
(368.8)
(406.7)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the
accompanying notes.
86
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2016
Notes
2016
US$M
2015
US$M
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Inventories
Assets classified as held for sale
Total current assets
Non current assets
Trade and other receivables
Inventories
Other financial assets
Property, plant and equipment
Mine development
Exploration and evaluation expenditure
Intangible assets
Deferred tax assets
Total non current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Interest bearing loans and borrowings
Other Interest bearing loans - CNNC
Provisions
Total current liabilities
Non current liabilities
Interest bearing loans and borrowings
Other Interest bearing loans - CNNC
Deferred tax liabilities
Provisions
Unearned revenue
Total non current liabilities
Total Liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Parent interests
Non-controlling interests
Total equity
6
16
17
18
16
17
19
20
21
22
23
13
24
7
8
25
7
8
13
25
26
9
9
32
59.2
12.2
1.6
35.9
-
108.9
1.2
-
0.9
256.8
39.8
336.1
11.1
36.3
682.2
791.1
31.5
204.7
10.4
2.2
248.8
127.8
86.3
-
79.3
200.0
493.4
742.2
48.9
2,101.1
49.9
(2,023.7)
127.3
(78.4)
48.9
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
183.7
9.5
2.9
75.3
2.8
274.2
0.6
156.3
2.6
273.7
43.0
337.9
11.7
-
825.8
1,100.0
30.4
8.5
-
3.5
42.4
427.3
98.7
47.9
85.4
200.0
859.3
901.7
198.3
2,094.9
61.1
(1,901.7)
254.3
(56.0)
198.3
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2016
Contributed
Equity
US$M
Available
-for-Sale
Reserve
US$M
Share-Based
Payments
Reserve
US$M
Convertible
Bond Non-
Distributable
Reserve
US$M
Foreign
Currency
Revaluation
Reserve
US$M
Premium
on
Acquisition
Reserve
US$M
Balance at 1 July 2014
1,926.9
(3.6)
47.6
85.5
(38.4)
14.9
Loss for the period
Other comprehensive
income/(loss)
Total comprehensive
income/ (loss) for the year
net of tax
Share-based payment
Vesting performance rights
Contributions of equity, net
of transaction costs
Convertible bond, equity
component – net of
transaction costs
Convertible bond, buy back
Allotment of interest in
Paladin (Africa) to Govt of
Malawi to maintain 15%
shareholding
Sale of 25% interest in
Langer Heinrich to CNNC
-
-
-
-
1.8
166.2
-
-
-
-
-
(1.8)
(1.8)
-
-
-
-
-
-
-
-
-
-
0.6
(1.8)
-
-
-
-
-
-
-
-
-
-
-
16.0
(7.2)
-
-
-
(99.2)
(99.2)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 30 June 2015
2,094.9
(5.4)
46.4
94.3
(137.6)
14.9
Loss for the period
Other comprehensive
income/(loss)
Total comprehensive
income/ (loss) for the year
net of tax
Share-based payment
Vesting performance rights
Convertible bond, equity
component – net of
transaction costs
Convertible bond, buy back
-
-
-
5.9
0.3
-
-
-
0.7
0.7
-
-
-
-
-
-
-
0.5
(0.2)
-
-
-
-
-
-
-
57.3
(57.3)
-
(12.2)
(12.2)
-
-
-
-
-
-
-
-
-
-
-
Balance at 30 June 2016
2,101.1
(4.7)
46.7
94.3
(149.8)
14.9
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
88
PALADIN ENERGY LTD | ANNUAL REPORT 2016
Option Application
Reserve
US$M
Consolidation
Reserve
US$M
Accumulated
Losses
US$M
Attributable to Owners
of the Parent
US$M
Non-Controlling
Interests
US$M
Total
US$M
0.1
55.8
(1,633.9)
(267.8)
-
454.9
(267.8)
(101.0)
(22.5)
(32.3)
(5.6)
432.4
(300.1)
(106.6)
(267.8)
(368.8)
(37.9)
(406.7)
T
R
O
P
E
R
L
A
C
N
A
N
F
I
I
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4.4)
(3.0)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.1
48.4
(1,901.7)
(122.0)
-
0.1
48.4
(2,023.7)
-
-
-
-
-
-
-
-
-
-
-
0.6
-
166.2
16.0
(7.2)
(4.4)
(3.0)
254.3
(122.0)
(11.5)
-
-
-
-
-
4.4
-
(56.0)
(22.4)
-
0.6
-
166.2
16.0
(7.2)
-
(3.0)
198.3
(144.4)
(11.5)
6.4
0.1
57.3
(57.3)
127.3
-
-
-
-
(78.4)
6.4
0.1
57.3
(57.3)
48.9
89
(122.0)
(133.5)
(22.4)
(155.9)
PALADIN ENERGY LTD | ANNUAL REPORT 2016
T
R
O
P
E
R
L
A
C
N
A
N
F
I
I
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
Notes
2016
US$M
2015
US$M
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Exploration and evaluation expenditure
Other income
NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES
15
CASH FLOWS FROM INVESTING ACTIVITIES
Capitalised exploration expenditure
Payments for property, plant and equipment
Payments for available-for-sale investments
Proceeds from sale of property, plant & equipment
Proceeds from sale of available-for-sale investments
NET CASH OUTFLOW FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings
Repayment of convertible bonds
Proceeds from convertible bonds
Convertible bond finance costs
Share placement
Proceeds from entitlement issue
Equity fundraising costs
Project finance facility establishment costs
Costs from sale of non-controlling interest
Proceeds from sale of non-controlling interest
NET CASH (OUTFLOW)/INFLOW FROM FINANCING ACTIVITIES
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the
financial year
Effects of exchange rate changes on cash
and cash equivalents
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
6
186.0
(153.8)
0.5
(27.8)
(0.9)
0.3
4.3
(4.2)
(3.8)
-
2.5
0.2
(5.3)
(66.1)
(56.4)
-
-
-
-
-
-
-
-
(122.5)
(123.5)
183.7
(1.0)
59.2
215.4
(210.9)
0.9
(29.7)
(1.6)
1.2
(24.7)
(4.2)
(11.5)
(0.2)
-
0.3
(15.6)
(39.9)
(300.0)
150.0
(4.2)
52.7
119.7
(6.2)
(1.5)
(3.0)
170.0
137.6
97.3
88.8
(2.4)
183.7
The above Consolidated Statement of Cash Flows should be read with the accompanying notes.
90
PALADIN ENERGY LTD | ANNUAL REPORT 2016
I
I
S
T
N
E
M
E
T
A
T
S
L
A
C
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A
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F
D
E
T
A
D
L
O
S
N
O
C
E
H
T
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S
E
T
O
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6
1
0
2
E
N
U
J
0
3
D
E
D
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R
A
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Y
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H
T
R
O
F
T
R
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P
E
R
L
A
C
N
A
N
F
I
I
PALADIN ENERGY LTD AND CONTROLLED ENTITIES
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
EXPRESSED IN US DOLLARS
CONTENTS
Basis Of Preparation .................................................................................................................92
Corporate Information ............................................................................................ 92
Note 1.
Structure Of The Financial Report ......................................................................... 92
Note 2.
Basis Of Preparation ............................................................................................... 93
Note 3.
Note 4.
Going Concern ......................................................................................................... 95
Segment Information ................................................................................................................96
Note 5.
Segment Information .............................................................................................. 96
Capital Structure .......................................................................................................................99
Cash And Cash Equivalents .................................................................................... 99
Note 6.
Interest Bearing Loans And Borrowings ................................................................ 100
Note 7.
Other Interest Bearing Loans - CNNC ................................................................... 101
Note 8.
Contributed Equity And Reserves ........................................................................... 102
Note 9.
Note 10.
Financial Risk Management ................................................................................... 104
Performance For The Year ........................................................................................................108
Revenue ................................................................................................................... 108
Note 11.
Other Income And Expenses .................................................................................. 109
Note 12.
Income And Other Taxes ......................................................................................... 111
Note 13.
Earnings Per Share ................................................................................................. 113
Note 14.
Reconciliation Of Earnings After Income Tax To Net Cash Flow From
Note 15.
Operating Actvities .................................................................................................. 114
Operating Assets And Liabilities ...............................................................................................114
Trade And Other Receivables .................................................................................. 114
Note 16.
Inventories ............................................................................................................... 115
Note 17.
Assets Classified As Held For Sale ......................................................................... 116
Note 18.
Other Financial Assets ............................................................................................ 116
Note 19.
Property, Plant And Equipment .............................................................................. 117
Note 20.
Mine Development .................................................................................................. 119
Note 21.
Exploration And Evaluation Expenditure ................................................................ 121
Note 22.
Intangible Assets ..................................................................................................... 123
Note 23.
Trade And Other Payables ...................................................................................... 124
Note 24.
Provisions ................................................................................................................ 124
Note 25.
Unearned Revenue .................................................................................................. 126
Note 26.
............................................................................................................................126
Other Notes
Key Management Personnel .................................................................................. 126
Note 27.
Auditors’ Remuneration .......................................................................................... 127
Note 28.
Commitments And Contingencies.......................................................................... 127
Note 29.
Related Parties ........................................................................................................ 128
Note 30.
Share-Based Payment Plans.................................................................................. 129
Note 31.
Group Information ................................................................................................... 132
Note 32.
Events After The Balance Date ............................................................................... 135
Note 33.
New Accounting Standards And Interpretations .................................................... 136
Note 34.
91
PALADIN ENERGY LTD | ANNUAL REPORT 2016
T
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P
E
R
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A
C
N
A
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F
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I
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N
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M
E
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A
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S
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A
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A
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D
E
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A
D
L
O
S
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O
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6
1
0
2
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0
3
D
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T
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F
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENT
FOR THE YEAR ENDED 30 JUNE 2016
EXPRESSED IN US DOLLARS
BASIS OF PREPARATION
NOTE 1. CORPORATE INFORMATION
The Financial Report of Paladin for the year ended 30 June 2016 was authorised for issue in accordance with
a resolution of the Directors on 24 August 2016.
Paladin is a company limited by shares, incorporated and domiciled in Australia whose shares are publicly
traded on the ASX, with additional listings on the Toronto Stock Exchange in Canada as well as Munich, Berlin,
Stuttgart and Frankfurt Stock Exchanges in Europe; and the Namibian Stock Exchange in Africa.
The Group’s principal place of business is Hay Street, Subiaco, Western Australia. The nature of the operations
and principal activities of the Group are described in the Management Discussion and Analysis (unaudited) on
pages 10 to 41.
NOTE 2. STRUCTURE OF THE FINANCIAL REPORT
The Notes to the Consolidated Financial Statements have been grouped into six key categories, which are
summarised as follows:
Basis of Presentation
This section sets out the group’s significant accounting policies that relate to the financial statements as
a whole. Where an accounting policy is specific to one note, the policy is described in the note to which
it relates. Accounting policies determined non-significant are not included in the financial statements.
There have been no changes to the Group’s accounting policies that are no longer disclosed in the financial
statements.
Segment Information
This section compares performance across operating segments.
Capital Structure
This section outlines how the group manages its capital and related financing costs.
Performance for the Year
This section focuses on the results and performance of the group. This covers both profitability and the
resultant return to shareholders via earnings per share combined with cash generation.
Operating Assets and Liabilities
This section shows the assets used to generate the group’s trading performance and the liabilities incurred as
a result. Liabilities relating to the group’s financing activities are addressed in the Capital Structure section.
Other Notes
This section deals with the remaining notes that do not fall into any of the other categories.
92
PALADIN ENERGY LTD | ANNUAL REPORT 2016
NOTE 3. BASIS OF PREPARATION
Introduction and Statement of Compliance
The Financial Report is a general purpose Financial Report, which has been prepared in accordance with
the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards Board.
The Financial Report complies with International Financial Reporting Standards as issued by the International
Accounting Standards Board. The Financial Report has also been prepared on a historical cost basis, except
for available-for-sale investments, which have been measured at fair value. Where necessary, comparatives
have been reclassified and repositioned for consistency with current year disclosures. For the purposes of
preparing the consolidated financial statements, the Company is a for-profit entity.
The Financial Report is presented in US dollars and all values are rounded to the nearest hundred thousand
dollars (US$100,000) unless otherwise stated under the option available to the Company under Australian
Securities and Investments Commission (ASIC) Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191. The Company is an entity to which the Instrument applies.
Changes in Accounting Policies
Apart from the changes in accounting policies noted below, the accounting policies adopted are consistent
with those disclosed in the Financial Report for the year ended 30 June 2015.
New Accounting Standards and Interpretations
The Group has adopted all new and amended Australian Accounting Standards and AASB Interpretations
effective from 1 July 2015. The nature and impact of each new standard and amendment is described below:
Reference
AASB 2013-9
Title
Impact
Amendments to Australian Accounting Standards – Conceptual
Framework, Materiality and Financial Instruments
There was no material impact on the Annual
Report.
The Standard contains three main parts and makes
amendments to a number of Standards and Interpretations.
Part A of AASB 2013-9 makes consequential amendments
arising from the issuance of AASB CF 2013-1.
Part B makes amendments to particular Australian Accounting
Standards to delete references to AASB 1031 and also makes
minor editorial amendments to various other standards.
AASB 2015-3
Amendments to Australian Accounting Standards arising from
the Withdrawal of AASB 1031 Materiality
No direct impact on accounts but the changes
apply to Standards relevant to Paladin.
The Standard completes the AASB’s project to remove
Australian guidance on materiality from Australian Accounting
Standards.
93
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 3. BASIS OF PREPARATION
(CONTINUED)
Basis of Consolidation
A change in the ownership interest of a subsidiary,
without a loss of control, is accounted for as an
equity transaction. If the Group loses control over a
subsidiary, it:
The consolidated financial statements comprise the
financial statements of Paladin Energy Ltd and its
subsidiaries as at 30 June 2016 (the Group).
Control is achieved when the Group is exposed, or has
rights, to variable returns from its involvement with
the investee and has the ability to affect those returns
through its power over the investee. Specifically, the
Group controls an investee if and only if the Group
has:
• Power over the investee (i.e. existing rights that
give it the current ability to direct the relevant
activities of the investee);
• Exposure, or rights, to variable returns from its
involvement with the investee; and
• The ability to use its power over the investee to
affect its returns.
When the Group has less than a majority of the voting
or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing
whether it has power over an investee, including:
• The contractual arrangement with the other vote
holders of the investee
• Rights arising from other contractual
arrangements
• The Group’s voting rights and potential voting
rights
The Group re-assesses whether or not it controls an
investee if facts and circumstances indicate that there
are changes to one or more of the three elements of
control. Consolidation of a subsidiary begins when
the Group obtains control over the subsidiary and
ceases when the Group loses control of the subsidiary.
Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the year are included in
the statement of comprehensive income from the date
the Group gains control until the date the Group ceases
to control the subsidiary.
Profit or
loss and each component of other
comprehensive income (OCI) are attributed to the
equity holders of the parent of the Group and to the
non-controlling interests, even if this results in the
non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting
policies into line with the Group’s accounting policies.
All intra-group assets and liabilities, equity, income,
expenses and cash flows relating to transactions
between members of the Group are eliminated in full
on consolidation.
• De-recognises the assets (including goodwill)
and liabilities of the subsidiary
• De-recognises the carrying amount of any non-
controlling interests
• De-recognises the cumulative translation
differences recorded in equity
• Recognises the fair value of the consideration
received
• Recognises the fair value of any investment
retained
• Recognises any surplus or deficit in profit or loss
• Reclassifies the parent’s share of components
previously recognised in OCI to profit or loss or
retained earnings, as appropriate, as would be
required if the Group had directly disposed of the
related assets or liabilities
• Business combinations are accounted for using
the acquisition method.
Foreign Currency Translation
Functional and Presentation Currency
Items included in the Financial Statements of each of
the Group’s entities are measured using the currency
of the primary economic environment in which
the entity operates (‘the functional currency’). The
Consolidated Financial Statements are presented
in United States dollars (US dollars), which is the
Company’s functional and presentation currency.
Transactions and Balances
Foreign currency transactions are converted into
the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the
settlement of such transactions and from the
translation at year-end exchange rates of monetary
assets and
foreign
liabilities denominated
currencies are recognised in the Income Statement.
Translation differences on available-for-sale financial
assets are included in the available-for-sale reserve.
in
Group Companies
Some Group entities have a functional currency of
US dollars which is consistent with the Company’s
functional and presentational currency. For all other
Group entities the functional currency has been
translated into US dollars for presentation purposes.
Assets and liabilities are translated using exchange
rates prevailing at the balance date; revenues and
94
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 expenses are translated using average exchange
rates prevailing for the income statement year;
and equity transactions are translated at exchange
rates prevailing at the dates of transactions. The
resulting difference from translation is recognised in
a foreign currency translation reserve. Upon the sale
of a subsidiary the Functional Currency Translation
Reserve (FCTR) attributable to the parent is recycled
to the Income Statement.
The following material operating subsidiaries have a
US dollar functional currency:
• Paladin Finance Pty Ltd
• Paladin (Africa) Limited
• Langer Heinrich Uranium (Pty) Ltd
• Paladin Nuclear Ltd
• Mount Isa Uranium Pty Ltd
• Paladin Energy Minerals NL
The following material operating subsidiary has an
Australian dollar functional currency:
• Summit Resources (Aust) Pty Ltd
The following material operating subsidiaries have a
Canadian dollar functional currency:
• Aurora Energy Ltd
• Michelin Uranium Ltd
• Paladin Canada Holdings (NL) Ltd
• Paladin Canada Investments (NL) Ltd
Significant Accounting Judgements, Estimates and
Assumptions
The preparation of
the Group’s consolidated
financial statements requires management to make
judgements, estimates and assumptions that affect
the reported amounts of revenues, expenses, assets
and liabilities, and the accompanying disclosures, and
the disclosure of contingent liabilities. Uncertainty
about these assumptions and estimates could result
in outcomes that require a material adjustment to
the carrying amount of assets or liabilities affected in
future periods.
The carrying amounts of certain assets and liabilities
are often determined based on estimates and
assumptions of future events. The key estimates and
assumptions, that have a significant risk of causing
a material adjustment to the carrying amounts of
certain assets and liabilities within the next annual
reporting period, are dealt with elsewhere in the
notes.
NOTE 4. GOING CONCERN
As at 30 June 2016, the Group had a net current
asset deficit of US$139.9M (30 June 2015: surplus
US$231.8M), including cash on hand of US$59.2M (30
June 2015: US$183.7M). Included within this cash on
hand is US$0.6M (30 June 2015: US$31.2M), which is
restricted for use in respect of supplier guarantees
provided by LHM, (30 June 2015: restricted for use
in respect of the LHM syndicated loan facility and
supplier guarantees provided by LHM).
The syndicated loan facility was repaid in full on 31
March 2016.
Repayment obligations during the next twelve months
to 30 June 2017 in respect of interest bearing loans
and borrowings are summarised as follows:
• interest payments of US$23.2M for the 2012 (due
2017) and 2015 (due 2020) unsecured
convertible bonds.
• US$212M principal repayment of 2012
unsecured convertible bonds maturing on 30
April 2017.
The ability of the Group to pay its debts as and when
they fall due and thus to continue as a going concern is
dependent upon the achievement of certain strategic
and financing initiatives, as outlined below.
The Directors are satisfied that it is appropriate to
prepare the financial statements on a going concern
basis, due to:
• The following strategic initiatives announced on
21 July 2016:
◦ A non-binding terms sheet signed with CNNC
Overseas Uranium Holdings Ltd (COUH) (the
existing 25% minority shareholder in LHM),
to sell a 24% interest in the Langer Heinrich
Mine. The sale is expected to raise US$175M
in cash for the Company with the Company
working towards a formal close of the
transaction in the fourth quarter of the 2016
calendar year.
◦ A binding terms sheet signed with MGT
Resources Limited (“MGT”) for sale of up
to a 75% interest in the Company’s 100%
owned Manyingee project. On closing of the
transaction, MGT will acquire a 30% initial
interest in Manyingee for US$10M cash
with an option to acquire an additional 45%
interest within twelve months for US$20M
cash. The transaction is conditional on
definitive documentation and a vote of MGT’s
shareholders expected to be concluded in the
fourth quarter of CY2016.
• The Company’s history of successful capital
raisings and other financing arrangements.
95
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 4. GOING CONCERN (CONTINUED)
SEGMENT INFORMATION
Should the Group not achieve the matters set out
above, there is uncertainty whether the Group would
continue as a going concern and therefore whether it
would realise its assets and extinguish its liabilities
in the normal course of business and at the amounts
stated in the financial report. The financial report does
not include adjustments relating to the recoverability
or classification of the recorded assets amounts nor
to the amounts or classification of liabilities that
might be necessary should the Group not be able to
continue as a going concern.
NOTE 5. SEGMENT INFORMATION
Identification of Reportable Segments
The Company has identified its operating segments
to be Exploration, Namibia and Malawi, on the
basis of the nature of the activity and geographical
location and different regulatory environments. The
main segment activity in Namibia and Malawi(1) is
the production and sale of uranium from the mines
located in these geographic regions. The Exploration
focused on developing exploration
segment
and evaluation projects in Australia and Canada.
Unallocated portion covers the Company’s sales and
marketing, treasury, corporate and administration.
is
Discrete financial information about each of these
operating segments is reported to the Group’s
executive management team (chief operating decision
makers) on at least a monthly basis.
The accounting policies used by the Group in reporting
segments internally are the same as those contained
in the accounts and in the prior period.
Inter-entity sales are priced with reference to the spot
rate.
Corporate charges comprise non-segmental expenses
such as corporate office expenses. A proportion of
the corporate charges are allocated to Namibia and
Malawi on the basis of timesheet allocations with the
balance remaining in Unallocated.
The Group’s customers are major utilities and other
entities located mainly in USA, Australia, China,
Taiwan and UK. These revenues are attributed to the
geographic location of the mines being the reporting
segments Namibia and Malawi.
[1] Currently on care and maintenance due to low
uranium price. Production ceased on 6 May 2014
96
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 The following tables present revenue, expenditure and asset information regarding operating segments for the
years ended 30 June 2016 and 30 June 2015.
Year ended
30 June 2016
Exploration
US$M
Namibia
US$M
Malawi
US$M
Unallocated
US$M
Consolidated
US$M
Sales to external customers
Other revenue
Total consolidated revenue
Cost of goods sold
Impairment of Inventory
Gross profit
Other expenses
Impairment of assets
Impairment of ore stockpiles
Segment loss before income
tax and finance costs
-
-
-
-
-
-
(0.9)
-
-
184.9
-
184.9
(152.5)
(19.2)
13.2
4.3
-
(168.9)
-
-
-
-
-
-
-
0.5
0.5
-
-
0.5
(10.1)
(12.8)
(2.4)
-
(2.6)
-
(14.9)
(36.2)
(51.1)
(0.8)
184.9
0.5
185.4
(152.5)
(19.2)
13.7
(19.5)
(5.0)
(168.9)
(179.7)
(48.1)
(227.8)
83.4
(0.9)
(151.4)
(12.5)
Finance costs
-
(11.6)
(0.3)
Loss before income tax
(0.9)
(163.0)
(12.8)
Income tax benefit/(expense)
-
84.2
-
Loss after income tax
(0.9)
(78.8)
(12.8)
(51.9)
(144.4)
At 30 June 2016
Segment assets/total assets
337.8
441.0
0.9
11.4(1)
791.1
Australia
US$M
Canada
US$M
Namibia
US$M
Other
US$M
Consolidated
US$M
Non current assets (excluding financial instruments)
by country
118.0
221.2
305.8
-
645.0
In 2016, the most significant customers equated to 24% (US$44.6M Namibia), 16% (US$29.1M Namibia), 14%
(US$26.8M Namibia) and 13% (US$24.0M Namibia) of the Group’s total sales revenue.
[1] Includes US$8.6M in cash and cash equivalents and US$0.9M available-for-sale financials assets (refer to Note 19).
97
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 5. SEGMENT INFORMATION (CONTINUED)
Year ended
30 June 2015
Exploration
US$M
Namibia
US$M
Malawi
US$M
Unallocated
US$M
Consolidated
US$M
Sales to external customers
Other revenue
Total consolidated revenue
Cost of goods sold
Impairment of Inventory
Gross profit
Other expenses
Impairment of asset
Write off of Exploration and evaluation
Segment loss before income
tax and finance costs
Finance costs
-
-
-
-
-
-
(1.5)
(237.5)
(1.4)
(240.4)
-
191.9
-
191.9
6.7
-
6.7
(182.9)
(6.8)
(8.0)
1.0
(2.2)
-
-
(1.2)
(10.2)
-
(0.1)
(23.6)
-
-
(23.7)
(2.2)
Loss before income tax
(240.4)
(11.4)
(25.9)
Income tax benefit/(expense)
72.1
(17.0)
-
-
0.9
0.9
-
-
0.9
(12.9)
(3.9)
-
(15.9)
(44.6)
(60.5)
(17.0)
198.6
0.9
199.5
(189.7)
(8.0)
1.8
(40.2)
(241.4)
(1.4)
(281.2)
(57.0)
(338.2)
38.1
Loss after income tax
(168.3)
(28.4)
(25.9)
(77.5)
(300.1)
At 30 June 2015
Segment assets/total assets
340.9
622.8
12.6
123.7(1)
1,100.0
Australia
US$M
Canada
US$M
Namibia
US$M
Other
US$M
Consolidated
US$M
Non current assets (excluding financial instruments)
by country
111.1
231.1
481.0
-
823.2
In 2015, the three most significant customers equated to 25% (US$50.2M Namibia), 22% (US$44.6M Namibia)
and 14% (US$27.5M Namibia, Malawi) of the Group’s total sales revenue.
[1] Includes US$116.0M in cash and cash equivalents and US$2.6M available-for-sale financials assets (refer to Note
19).
98
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 CAPITAL STRUCTURE
NOTE 6. CASH AND CASH EQUIVALENTS
The group’s objectives when managing capital are to
safeguard its ability to continue as a going concern, so
that it can continue to provide returns to shareholders
and benefits for other stakeholders and to maintain
an efficient capital structure to reduce the cost of
capital. Capital includes issued capital and all other
equity reserves attributable to the equity holders of
the parent.
In order to maintain or adjust the capital structure,
the group may issue new shares or sell assets to
reduce debt.
The group monitors capital on the basis of the level
of return on capital and also the level of net cash/
debt and compliance with bank covenants, including
the gearing ratio calculated as a net debt / (net debt
+ equity). The group manages funds on a group basis
with all funds being drawn by the parent entity.
Cash at bank and on hand
Short-term bank deposits
2016
US$M
2015
US$M
7.0
52.2
3.1
180.6
Total cash and cash equivalents
59.2
183.7
Total cash and cash equivalents includes US$0.6M (30
June 2015: US$31.2M) restricted for use in respect
of supplier guarantees provided by LHM, (30 June
2015: restricted for use in respect of the syndicated
loan facility (refer to Note 7) and supplier guarantees
provided by LHM).
Recognition and measurement
Cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other
short-term, highly liquid investments with original
maturities of three months or less that are readily
convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value,
and bank overdrafts. Cash at bank earns interest
at floating rates based on daily bank deposit rates.
Short-term deposits are made for varying periods
depending on the immediate cash requirements of
the Group, and earn interest at the respective short-
term deposit rates.
99
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016
NOTE 7. INTEREST BEARING LOANS AND
BORROWINGS
Maturity
2016
US$M
2015
US$M
Current
Unsecured convertible
bonds(1)
Secured bank loans
2017
204.7
-
-
8.5
Total current interest bearing loans
and borrowings
204.7
8.5
Non Current
Unsecured convertible
bonds(1)
Unsecured convertible
bonds(2)
Secured bank loan(3)
2017
-
254.3
2020
127.8
123.4
amortised to
2019
-
49.6
Total non current interest bearing loans
and borrowings
127.8
427.3
figures
The above
transaction costs
which offset the balance in accordance with the
requirements of Accounting Standards.
include
Fair value disclosures
Details of the fair value of the Group’s interest
bearing liabilities are set out in Note 10.
Unsecured convertible bonds
[1] On 30 April 2012, the Company issued US$274M
in convertible bonds with a coupon rate of 6%
(underlying effective interest rate of 10.68%) maturing
on 30 April 2017 with a conversion price of US$1.83
for Company shares. During the year ended 30 June
2016, the Company repurchased a principal amount
of US$62M thereby reducing the principal amount
outstanding to US$212M. The cash expenditure for the
repurchase was approximately US$57.5M (including
accrued interest) as the bonds were bought back at an
average price of 91.0 per cent.
[2] On 31 March 2015, the Company issued US$150M
in convertible bonds with a coupon rate of 7%
(underlying effective interest rate of 12.37%) maturing
on 31 March 2020 with a conversion price of US$0.356
for Company shares.
Secured bank loans
[3] Langer Heinrich Mine, Namibia - US$70M Syndicated
Loan Facility was repaid in full on 31 March 2016. At
30 June 2016, US$Nil (30 June 2015: US$60.9M) was
outstanding under the syndicated loan facility.
100
Recognition and measurement
Bank loan borrowings are initially recognised at fair
value, net of transaction costs incurred. Bank loan
borrowings are subsequently measured at amortised
cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is
recognised in the Income Statement over the period
of the borrowings using the effective interest method.
Borrowings are classified as current
liabilities
unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after
the balance date.
The component of convertible bonds that exhibits
characteristics of debt is recognised as a liability in
the Statement of Financial Position, net of transaction
costs. On issue of convertible bonds, the fair value of the
liability component is determined using a market rate
for an equivalent non-convertible bond and this amount
is carried as a liability on the amortised cost basis until
extinguished on conversion or redemption. The increase
in the liability due to the passage of time is recognised
as a finance cost. The remainder of the proceeds is
allocated to the equity component and is recognised in
shareholders’ equity. The carrying amount of the equity
component is not remeasured in subsequent years.
Financing facilities available
At reporting date, the following financing facilities
had been negotiated and were available:
Total facilities:
Unsecured convertible bonds
Secured bank loans
Facilities used at reporting date:
Unsecured convertible bonds
Secured bank loans
Facilities unused at reporting date:
Unsecured convertible bonds
Secured bank loans
2016
US$M
2015
US$M
362.0
-
362.0
362.0
-
362.0
-
-
424.0
60.9
484.9
424.0
60.9
484.9
-
-
Year ended 30 June 2015, the syndicated loan facility
held no security over project assets. The facility was
secured by a Share Pledge Agreement from PFPL
over its 75% interest in LHMHL.
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016
NOTE 8. OTHER INTEREST BEARING LOANS -
CNNC
30 June
2016
US$M
30 June
2015
US$M
Current
Maturity
Other loan - CNNC
2016 to 2021
10.4
-
Non Current
Maturity
Other loan - CNNC
2016 to 2021
86.3
98.7
As part of the sale of a 25% interest in the Langer
Heinrich mining operation, US$96M (representing
25%) of the intercompany shareholder loans owing by
LHU to PFPL were assigned to CNNC under the same
interest rate (LIBOR plus a margin between 2% and
4.25%) and conditions as those presently existing.
Pursuant to the intercompany shareholder loan
agreements, repayment dates range from 2016 to
2021, however, under the Shareholders’ Agreement
between CNNC and PFPL, each shareholder has
agreed not to demand repayment without the prior
written consent of the other shareholder. As neither
CNNC nor PFPL can demand repayment, the
repayment of the loans can be deferred. Repayment
is dependent on LHU generating sufficient free cash
flows to repay the loans and the loans have not
been guaranteed by Paladin Energy Ltd (Paladin).
During the quarter ended 31 March 2016 a US$5.2M
distribution was made by LHU to CNNC by way of
a repayment of the intercompany loans assigned.
US$10.4M of the balance has been classified as
current at 30 June 2016 due to the intention to repay
within twelve months.
All loan repayments from LHU will be paid on a
pro rata basis against the outstanding balances,
(i.e. 75% to PFPL and 25% to CNNC).
the
intercompany shareholder
On consolidation, PFPL’s 75% share of the LHU
loans are eliminated
intercompany shareholder
loans
against
receivable recorded in PFPL and therefore, they do
not appear on Paladin’s consolidated statement of
financial position. As a result of the consolidation
of 100% of LHU’s assets and liabilities, LHU’s total
liability of US$96.7M to CNNC is recognised on the
consolidated statement of financial position.
101
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 9. CONTRIBUTED EQUITY AND RESERVES
Issued and Paid Up Capital
Number of Shares
2016
2015
2016
US$M
2015
US$M
Ordinary shares
Issued & fully paid
1,712,843,812
1,666,927,668
2,101.1
2,094.9
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Recognition and measurement
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are
shown in equity as a deduction, net of tax, from the proceeds.
Movements in Ordinary Shares on Issue
Date
Number of Shares
Issue Price
A$
Exchange Rate
US$: A$
Total
US$M
Balance 30 June 2014
964,367,284(1)
1,926.9
September 2014
Rights vested
September 2014
Rights vested
November 2014
Rights vested
390,950
136,340
857,544
-
-
-
-
-
-
-
-
-
November 2014
Share placement
144,862,817
0.42
1.15423
52.7
December 2014
Rights vested
December 2014
Institutional entitlement
offer
December 2014
Retail entitlement offer
1,003,238
191,530,053
363,779,442
0.26
0.26
1.18827
1.21563
Transfer from share-based
payments reserves
Transaction costs
Balance 30 June 2015
1,666,927,668(2)
[1]
Includes 1,084 shares held by Paladin Employee Plan Pty Ltd
41.9
77.8
1.8
(6.2)
2,094.9
45,000,000
0.18
1.36273
5.9
August 2015
Acquisition of
Carley Bore Project
September 2015
Rights vested
October 2015
Rights vested
December 2015
Rights vested
May 2016
Rights vested
Transfer from share-
based payments reserve
Balance 30 June 2016
1,712,843,812(2)
[2]
Includes 184 shares held by Paladin Employee Plan Pty
102
163,265
78,047
547,442
127,390
-
-
-
-
-
-
-
-
-
-
-
-
0.3
2,101.1
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 Reserves
Consolidation
reserve
Listed
option
application
reserve
Share-based
payments
reserve
Available
-for-sale
reserve
Foreign
currency
translation
reserve
Convertible
bond non-
distributable
reserve
Premium on
acquisition
reserve
Total
US$M
US$M
US$M
US$M
US$M
US$M
US$M
US$M
At 30 June 2014
55.8
0.1
47.6
(3.6)
(38.4)
85.5
14.9
161.9
Net unrealised
movement on
available-for-sale
investments
Share-based
payments
Foreign currency
translation
Transfer of
impairment loss to
Income Statement
Transfer realised
gains to other
income
Income Tax
Convertible bond,
equity component –
net of transaction
costs
Convertible bond,
buy back
Allotment of interest
in Paladin (Africa) to
Govt of Malawi to
maintain 15%
shareholding
Sale of 25% interest
in Langer Heinrich
to CNNC
At 30 June 2015
Net unrealised
movement on
available-for-sale
investments
Share-based
payments
Foreign currency
translation
Transfer of
impairment loss to
Income Statement
Income Tax
Convertible bond,
equity component –
net of transaction
costs
Convertible bond,
buy back
-
-
-
-
-
-
-
-
(4.4)
(3.0)
48.4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3.7)
(1.2)
-
-
-
-
-
-
-
-
-
-
2.9
(0.4)
(0.6)
-
-
-
-
-
-
(99.2)
-
-
-
-
-
-
-
-
-
-
-
-
-
16.0
(7.2)
-
-
-
-
-
-
-
-
-
-
-
-
(3.7)
(1.2)
(99.2)
2.9
(0.4)
(0.6)
16.0
(7.2)
(4.4)
(3.0)
0.1
46.4
(5.4)
(137.6)
94.3
14.9
61.1
-
-
-
-
-
-
-
-
(1.5)
0.3
-
-
-
-
-
-
-
-
0.4
(12.2)
1.5
0.3
-
-
-
-
-
-
-
-
-
-
-
57.3
(57.3)
-
-
-
-
-
-
-
(1.5)
0.3
(11.8)
1.5
0.3
57.3
(57.3)
At 30 June 2016
48.4
0.1
46.7
(4.7)
(149.8)
94.3
14.9
49.9
103
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 9. CONTRIBUTED EQUITY AND
RESERVES (CONTINUED)
NOTE 10. FINANCIAL RISK MANAGEMENT
Nature and Purpose of Reserves
Financial Risk Management Objectives and Policies
Consolidation reserve
This reserve recognises the difference between the
fair value of the 15% interest in PAL allotted to the
Government of Malawi, at the net present value of
the Kayelekera Project on the date the Development
Agreement was signed (22 February 2007), and the
non-controlling interest in the net assets of PAL. It
also recognises the excess of the proceeds received
over the 25% interest in net assets of Langer Heinrich
Mauritius Holdings limited and Langer Heinrich
Uranium (Pty) Ltd disposed of to China Uranium
Corporation Limited, a subsidiary of China National
Nuclear Corporation, on 28 June 2014 under the
Share Sale Agreement dated 18 January 2014.
Listed option application reserve
This reserve consists of proceeds from the issue of
listed options, net of expenses of issue. These listed
options expired unexercised and no restriction exists
for the distribution of this reserve.
Share-based payments reserve
The Group’s management of financial risk is aimed at
ensuring net cash flows are sufficient to:
• meet all its financial commitments; and
• maintain the capacity to fund corporate growth
activities.
The Group monitors its forecast financial position on
a regular basis.
Market, liquidity and credit risk (including foreign
exchange, commodity price and interest rate risk) arise
in the normal course of the Group’s business. These
risks are managed under Board approved directives
which underpin treasury practices and processes.
The Group’s principal financial instruments comprise
interest bearing debt, cash and short-term deposits
and available for sale financial assets. Other financial
instruments include trade receivables and trade
payables, which arise directly from operations.
The Group’s forecast financial risk position with
respect to key financial objectives and compliance
with treasury practice is regularly reported to the
Board.
This reserve is used to record the value of equity
benefits provided to Directors, employees and
consultants as part of their remuneration. Refer to
Note 31 for further details on share-based payments.
Market Risk
Foreign Exchange Risk
The Group operates internationally and is exposed to
foreign exchange risk arising from various currency
exposures.
risk
future
exchange
Foreign
commitments, assets and
that are
denominated in a currency that is not the functional
currency of the relevant Group company.
liabilities
arises
from
The Group’s borrowings and deposits are largely
denominated in US dollars. Currently there are
no foreign exchange hedge programmes in place.
However, the Group treasury function manages the
purchase of foreign currency to meet operational
requirements.
Available-for-sale reserve
This reserve records the fair value changes on the
available-for-sale financial assets as set out in Note
19.
Foreign currency translation reserve
This reserve is used to record exchange differences
arising on translation of the group entities that do
not have a functional currency of US dollars and
have been translated into US dollars for presentation
purposes, as described in Note 3.
Convertible bond non-distributable reserve
This reserve records the equity portion of the
convertible bonds issued as described in Note 7.
Acquisition reserve
This reserve represents the premium paid on the
acquisition of a non-controlling interest in Summit.
104
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 The financial instruments exposed to movements in
the Namibian dollar are as follows:
Based on the Group’s net exposure at the balance
date, a reasonably possible change in LIBOR would
not have a material impact on profit or equity.
2016
US$M
2015
US$M
Liquidity Risk
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Net exposure
6.4
10.9
17.3
(16.3)
1.0
2.0
7.0
9.0
(20.5)
(11.5)
Based on the Group’s net exposure at the balance
date, a reasonably possible change in the exchange
rate would not have a material impact on profit or
equity.
Interest Rate Risk
Interest rate risk is the risk that the Group’s financial
position will be adversely affected by movements in
interest rates that will increase the cost of floating
rate debt or opportunity losses that may arise on fixed
rate borrowings in a falling interest rate environment.
Interest rate risk on cash and short-term deposits is
not considered to be a material risk due to the short-
term nature of these financial instruments.
The Group’s main interest rate risk arises from long-
term debt. Floating rate debt exposes the Group
to cash flow interest rate risk and fixed rate debt
exposes the Group to fair value interest rate risk.
All other financial assets and liabilities in the form
of receivables, investments in shares, payables and
provisions, are non-interest bearing.
The Group currently does not engage in any hedging
or derivative transactions to manage interest rate
risk.
The floating rate financial instruments exposed to
interest rates movements are as follows:
2016
US$M
2015
US$M
Financial assets
Cash and cash equivalents – short-term
deposits
59.2
183.7
Financial liabilities
Interest-bearing liabilities
(96.7)
(159.7)
Net exposure
(37.5)
24.0
The liquidity position of the Group is managed to
ensure sufficient liquid funds are available to meet
the Group’s financial commitments in a timely and
cost effective manner.
The Group treasury function continually reviews
the Group’s liquidity position including cash flow
forecasts to determine the forecast liquidity position
and maintain appropriate liquidity levels. Sensitivity
analysis is conducted on a range of pricing and market
assumptions to ensure the Group has the ability to
meet repayment commitments. This enables the
Group to manage cash flows on a long-term basis
and provides the flexibility to pursue a range of
funding alternatives if necessary. Note 7 details the
repayment obligations in respect of the amount of the
facilities.
The maturity analysis of payables at the reporting
date was as follows:
Payables maturity analysis
Total
US$M
<1
year
US$M
1-2
years
US$M
2-3
years
US$M
>3
years
US$M
31.5
31.5
452.8
215.6
-
-
-
-
-
237.2
70.1
26.4
13.8
13.9
16.0
554.4
273.5
13.8
13.9
253.2
30.4
30.4
-
-
-
580.9
12.9
283.1
14.1
270.8
113.6
33.4
32.9
16.0
31.3
724.9
76.7
316.0
30.1
302.1
2016
Trade
and other
payables
Loans and
borrowings
Interest
payable
Total
payables
2015
Trade
and other
payables
Loans and
borrowings
Interest
payable
Total
payables
105
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016
Fair Values
Set out below is a comparison by class of the carrying
amounts and fair value of the Group’s financial
instruments, other than those with carrying amounts
that are reasonable approximations of fair values as
at 30 June 2016:
2016
2015
Carrying
amount
Fair
value
Carrying
amount
Fair
value
US$M
US$M
US$M
US$M
Financial liabilities
Interest bearing loans and borrowings:
Secured bank
loan
Debt component
of Unsecured
convertible
bonds
-
-
8.5
9.1
204.7(1)
202.1
-
-
Total current
204.7
202.1
8.5
9.1
Interest bearing loans and borrowings:
Secured bank
loan
Debt component
of Unsecured
convertible
bonds
Total non-
current
-
-
49.6
51.8
127.8(1)
134.7
377.7(1)
401.1
127.8
134.7
427.3
452.9
Total
332.5
336.8
435.8
462.0
[1] This figure includes transaction costs which offset
the balance in accordance with the requirements of
Accounting Standards.
(NOTE 10. FINANCIAL RISK MANAGEMENT
CONTINUED)
Credit Risk
Credit risk is the risk that a contracting entity will not
complete its obligation under a financial instrument
that will result in a financial loss to the Group. The
carrying amount of financial assets represents the
maximum credit exposure. The Group trades only with
recognised, creditworthy third parties. In addition,
receivable balances are monitored on an ongoing
basis with the result that the Group’s exposure to bad
debts is not significant.
The maximum exposure to credit risk at the reporting
date was a total of US$72.6M (2015 US$193.8M),
comprising cash and receivables.
Current
Cash and cash equivalents*
Trade receivables
Other receivables – other entities
Non Current
Other receivables – other entities
Total
2016
US$M
2015
US$M
59.2
1.0
11.2
71.4
1.2
72.6
183.7
2.1
7.4
193.2
0.6
193.8
* The Group’s maximum deposit with a single financial
institution represents 85% (2015: 57%) of cash and
cash equivalents.
Receivables Ageing Analysis
2016
Total
US$M
Current
US$M
>1 year
US$M
Trade receivables
1.0
1.0
Other receivables
12.4
11.2
Total receivables
13.4
12.2
-
1.2
1.2
2015
Total
US$M
Current
US$M
>1 year
US$M
Trade receivables
Other receivables
Total receivables
2.1
8.0
10.1
2.1
7.4
9.5
-
0.6
0.6
No receivables are past due or impaired.
106
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 The Group uses various methods in estimating the
fair value of a financial instrument. The methods
comprise:
Level 1 – the fair value is calculated using quoted
prices in active markets.
Level 2 – the fair value is estimated using inputs
other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices).
Level 3 – the fair value is estimated using inputs for
the asset or liability that are not based on observable
market data.
The fair value of the financial instruments as well as the methods used to estimate the fair value are
summarised in the table below:
Year ended 30 June 2016
Year ended 30 June 2015
Quoted
market price
(Level 1)
Valuation
technique-
market
observable
inputs (Level
2)
Valuation
technique-
non market
observable
inputs (Level
3)
Total
Quoted
market
price
(Level 1)
Valuation
technique-
market
observable
inputs (Level
2)
Valuation
technique-
non market
observable
inputs (Level
3)
Total
US$M
US$M
US$M
US$M
US$M
US$M
US$M
US$M
Financial assets measured at fair value
Available-for-sale investments
Listed
Investments
0.9
0.9
-
-
Financial liabilities for which fair values are disclosed
Interest bearing loans and borrowings
Floating Rate
Borrowings (1)
Debt
component of
Convertible
bonds(2)
-
-
-
-
336.8
336.8
-
-
-
-
-
0.9
0.9
2.6
2.6
-
336.8
336.8
-
-
-
-
-
60.9
401.1
462.0
-
-
-
-
-
2.6
2.6
60.9
401.1
462.0
[1] The fair value has been determined by discounting
the future cash flows using market rates currently
available for debt on similar terms, credit risk and
remaining maturities.
[2] The fair value has been determined using a valuation
technique based on the quoted market price of the
bonds less the estimated fair value of the equity
component attributable to the conversion feature,
which was valued using an option pricing model. The
estimated fair value of the equity component was not
considered material at 30 June 2016.
Quoted market price represents the fair value
determined based on quoted prices on active markets
as at the reporting date without any deduction for
transaction costs. The fair value of the listed equity
investments are based on quoted market prices.
instruments not quoted
in active
For financial
markets, the Group uses valuation techniques such
as present value techniques, comparison to similar
instruments for which market observable prices
exist and other relevant models used by market
participants. These valuation techniques use both
observable and unobservable market inputs.
For financial instruments that are recognised at fair
value on a recurring basis, the Group determines
whether transfers have occurred between Levels in
the hierarchy by re-assessing categorisation (based
on the lowest level input that is significant to the fair
value measurement as a whole) at the end of each
reporting period.
107
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 10. FINANCIAL RISK MANAGEMENT
(CONTINUED)
Capital Management
When managing capital, management’s objective
is to ensure adequate cash resources to meet the
Company’s commitments are maintained, as well as
to maintain optimal returns to shareholders through
ensuring the lowest cost of capital available to the
entity.
The Company utilises a combination of debt, equity
and convertible bonds to provide the cash resources
required. Management reviews the capital structure
from time to time as appropriate.
The Group treasury function is responsible for the
Group’s capital management, including management
of the long-term debt and cash as part of the capital
structure. This involves the use of corporate forecasting
models which enable analysis of the Group’s financial
position including cash flow forecasts to determine
the future capital management requirements. To
ensure sufficient funding for operational expenditure
and growth activities, a range of assumptions are
modelled so as to provide the flexibility in determining
the Group’s optimal future capital structure.
Group treasury monitors gearing and compliances
with various contractual financial covenants. The
Company’s project finance facility is subject to
various financial undertakings including a negative
pledge, debt service coverage ratio, loan life coverage
ratio and project life coverage ratio. At the time of
reporting, the Company was in compliance with all of
the facility’s financial undertakings.
2016
US$M
2015
US$M
Total borrowings
429.2
534.5
Less cash and cash equivalents
(59.2)
(183.7)
Net debt
Total equity
Total Capital
Gearing Ratio
370.0
350.8
48.9
198.3
418.9
549.1
88%
64%
108
Commodity Price Risk
Uranium is not traded in any significant volume
on global commodity exchanges. The Group has
customer sales contracts in place for delivery over
the period 2016 to 2024.
Contracted selling prices are determined by a range
of mechanisms including base-escalated pricing and
formulas which reference common industry published
prices. Contracts may be subject to escalating floor
and ceiling prices.
PERFORMANCE FOR THE YEAR
NOTE 11. REVENUE
2016
US$M
2015
US$M
Sale of uranium
184.9
198.6
Interest income from non-related
parties
0.5
0.9
Total
185.4
199.5
Recognition and Measurement
Revenue is measured at the fair value of the
Amounts
consideration received or receivable.
disclosed as revenue are net of duties and taxes
paid. Revenue is recognised for the major business
activities as follows:
Sale of Uranium
Revenue from sale of uranium is recognised when
risk and reward of ownership pass, which is when title
of the product passes from the Group pursuant to an
enforceable contract, when selling prices are known
or can be reasonably estimated and when the product
is in a form that requires no further treatment by the
Group.
Interest Revenue
from
in cash
investments
is
Interest revenue
recognised in the Income Statement as interest
accrues using the effective interest method. This
is a method of calculating the amortised cost of a
financial asset and allocating the interest income over
the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated
future cash receipts through the expected life of the
financial asset to the net carrying amount of the
financial asset.
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 12. OTHER INCOME AND EXPENSES
Cost of Sales
Production costs before depreciation and amortisation
Depreciation and amortisation
Impairment loss reversed on sale of inventory
Product distribution costs
Royalties
Total
Other Income
Foreign exchange gain (net)
Gain on disposal of available-for-sale investments
Gain on disposal of tenements
Total
Administration, Marketing and Non-Production Costs
Corporate and marketing
Restructure Costs
LHM mine site
Depreciation and amortisation
Other
Total
Other Expenses
Impairment of assets(1)
Impairment of ore stockpiles(2)
Write-off of exploration assets(3)
Impairment of exploration assets(4)
Impairment of aircraft
Impairment for available for sale financial assets
KM stores & consumables obsolescence write off
LHM fixed costs during plant shutdown
KM care and maintenance expenses
KM mine closure provision increase
Total
2016
US$M
2015
US$M
(128.8)
(22.3)
7.9
(3.6)
(5.7)
(169.8)
(31.4)
24.9
(7.3)
(6.1)
(152.5)
(189.7)
9.2
-
-
9.2
(6.0)
(5.3)
(4.0)
(0.4)
(0.6)
(16.3)
(0.8)
(168.9)
-
-
(0.3)
(1.5)
(2.4)
(1.4)
(10.1)
-
(185.4)
4.3
0.6
0.6
5.5
(14.7)
-
(3.3)
(0.7)
(0.6)
(19.3)
-
-
(1.4)
(237.5)
(1.0)
(2.9)
-
(3.8)
(13.4)
(7.6)
(267.6)
[1] Impairment charge of US$0.8M relating to the impairment of Summit’s office building in Mount Isa.
[2] Impairment charge of US$168.9M relating to the impairment of LHM Ore Stockpiles. A change in LHM’s life of mine
plan, in order to reduce costs and improve cashflows, has resulted in a change in the timescale for processing the
ore stockpiles. The stockpiles are now forecast to be processed over the next three years compared to nine years
under the previous life of mine plan. The lower short-term forecast prices over the next three years compared to
medium to long-term forecast prices, when the stockpiles were originally planned to be processed, has resulted in
the net realisable value at 30 June 2016 being estimated as US$Nil. Refer to Note 17.
109
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 Recognition and measurement
Superannuation
contributes
to
in accordance with
employees’
The
Company
superannuation plans
the
requirements of Occupational Superannuation
Legislation. Contributions by the Company represent
a defined percentage of each employee’s salary.
Employee contributions are voluntary.
Employee Performance Share Rights Plan
Details of the Employee Performance Share Rights
Plan for the Company are disclosed in Note 31.
Depreciation – refer to Note 20.
Employee benefits – refer to Note 25.
Borrowing Costs
Borrowing costs incurred for the construction of any
qualifying asset are capitalised during the period of
time that is required to complete and prepare the asset
for its intended use or sale. Other borrowing costs
are expensed as incurred including the unwinding of
discounts related to mine closure provisions. When
relevant, the capitalisation rate used to determine
the amount of borrowing costs to be capitalised is
the weighted average interest rate applicable to the
entity’s outstanding borrowings during the year.
NOTE 12. OTHER INCOME AND EXPENSES
(CONTINUED)
[3] 2015 - The licence for Spinifex Well was surrendered
on 22 September 2014. All capitalised costs were
written off.
[4] 2015 - Impairment charge of US$237.5M, Queensland
exploration assets US$229.1M and Bigrlyi project
US$8.4M. At 30 June 2015, due to the continuing
depressed uranium price, US$229.1M (US$180.8M
after tax) was recognised to reduce the carrying value
of the Queensland exploration assets. The estimated
recoverable amount of the project of US$100.0M
was determined on the basis of fair value less costs
to dispose (level 3 fair value hierarchy), using a
valuation range provided by recent comparable market
transactions and other market indicators which
ranged from US$0.3/lb to US$7.5/lb. The estimated
recoverable amount for the Queensland exploration
assets equated to US$0.75/lb, which is based on more
recent market transactions and the current uranium
market. Bigrlyi was written down to a carrying value
of US$Nil.
2016
US$M
2015
US$M
Finance Costs
Interest expense
(30.3)
(33.5)
Accretion relating to convertible bonds
(13.5)
(18.2)
Profit on convertible bond buyback
2.2
1.0
Mine closure provision discount interest
expense
(3.6)
(5.7)
Facility costs
(2.9)
(0.6)
Total
(48.1)
(57.0)
Total depreciation and amortisation
expense
22.7
32.1
Employee Benefits Expense
Wages and salaries
(19.7)
(28.7)
Defined contribution superannuation
(1.7)
(2.3)
Share-based payments
(0.5)
(0.5)
Other employee benefits
(7.1)
(2.3)
Total
(29.0)
(33.8)
110
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 13. INCOME AND OTHER TAXES
Income Tax Benefit/(Expense)
Current income tax
Current income tax benefit/(expense)
Deferred income tax
Related to the origination and reversal of temporary differences
Income tax benefit reported in the Income Statement
Amounts Charged or Credited Directly to Equity
Deferred income tax related to items charged or credited directly to equity:
Foreign currency translation reserve movement
Other and prior period
Income tax benefit reported in equity
Numerical Reconciliation of Income Tax Benefit to Prima Facie Tax Payable
Loss before income tax expense
Tax at the Australian tax rate of 30% (2015– 30%)
Difference in overseas tax rates
Non - deductible items
Under/over prior year adjustment
Losses not recognised
Other foreign exchange differences
DTA not recognised
Income tax (expense)/benefit reported in the Income Statement
Tax Losses
2016
US$M
2015
US$M
-
-
83.4
83.4
-
0.8
0.8
227.8
68.3
12.2
64.1
16.3
-
(2.7)
(74.8)
83.4
38.1
38.1
11.1
(6.9)
4.2
338.2
101.4
0.5
20.8
(27.1)
-
(14.3)
(43.2)
38.1
Australian unused tax losses for which no deferred tax asset has been recognised
(419.2)
(387.8)
Other unused tax losses for which no deferred tax asset has been recognised
(223.4)
(384.6)
Total unused tax losses for which no deferred tax asset has been recognised
(642.6)
(772.4)
Unused tax losses for which no DTA has been recognised
(187.1)
(222.3)
111
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 13. INCOME AND OTHER TAXES (CONTINUED)
Deferred Income Tax
Deferred tax liabilities
Accelerated prepayment deduction for tax purposes
Accelerated depreciation for tax purposes
Exploration expenditure
Inventory / Consumables
Convertible bond
Gross deferred tax liabilities
Set off of deferred tax assets
Net deferred tax liabilities
Deferred tax as sets
Revenue losses available for offset against future taxable income
Available for sale securities
Foreign currency balances
Interest bearing liabilities
Other
Gross deferred tax assets
Set off against deferred tax liabilities
Net deferred tax assets recognised
2016
US$M
2015
US$M
(0.4)
(96.8)
(13.1)
(4.5)
(6.5)
(121.3)
121.3
-
84.9
6.9
63.1
-
2.7
157.6
(121.3)
36.3
(0.7)
(100.6)
(14.7)
(4.4)
(11.2)
(131.6)
(83.7)
(47.9)
33.5
9.7
37.0
-
3.5
83.7
(83.7)
-
Paladin and all its wholly-owned Australian resident
entities are part of a tax-consolidated group under
Australian tax law.
The tax rates and tax laws used to compute the
amount are those that are enacted or substantially
enacted, at the reporting date in the countries where
the Group operates and generates taxable income.
The net deferred tax assets recognised are in respect
of revenue losses expected to be offset against future
taxable income.
This benefit for tax losses will only be obtained if:
1.
2.
the Consolidated Entities derive future
assessable income of a nature and of an
amount sufficient to enable the benefit from the
deductions for the losses to be realised;
the Consolidated Entities continue to comply
with the conditions for deductibility imposed by
tax legislation; and
3. no changes in tax legislation adversely affect
the Consolidated Entities in realising the benefit
from the deductions for the losses.
Recognition and measurement
Current income tax assets and liabilities for the
current period are measured at the amount expected
to be recovered from or paid to the taxation authorities.
112
Current income tax relating to items recognised
directly in equity is recognised in equity and not in the
statement of profit or loss. Management periodically
evaluates positions taken in the tax returns with
respect
tax
regulations are subject to integration and establishes
provisions where appropriate.
in which applicable
to situations
Deferred tax assets and liabilities are recognised using
the full liability method for temporary differences at
the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those tax
rates which are enacted or substantively enacted for
each jurisdiction. The relevant tax rates are applied
to the cumulative amounts of deductible and taxable
temporary differences to measure the deferred tax
asset or liability. An exception is made for certain
initial
temporary differences arising
recognition of an asset or a liability. No deferred tax
asset or liability is recognised in relation to these
temporary differences if they arose in a transaction,
other than a business combination, that at the time of
from
the
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 the transaction did not affect either accounting profit
or taxable profit or loss.
NOTE 14. EARNINGS PER SHARE
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only
if it is probable that future taxable amounts will be
available to utilise those temporary differences and
losses.
Current and deferred tax balances attributable
to amounts recognised directly in equity are also
recognised directly in equity. Deferred tax assets and
liabilities are offset only if a legally enforceable right
exists to set off current tax assets against current tax
liabilities and the deferred tax assets and liabilities
relate to the same taxable entity and the same
taxation authority.
Significant Accounting Estimates and Assumptions
Deferred Tax Assets and Liabilities
The Group is subject to income taxes in Australia
and jurisdictions where it has foreign operations.
Significant judgement is required in determining
deferred tax assets and liabilities. There are many
transactions and calculations for which the ultimate
tax determination is uncertain during the ordinary
course of business.
The carrying amount of deferred income tax assets
is reviewed at each reporting date and reduced to
the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the
deferred income tax asset to be utilised. Significant
management judgement is required to determine the
amount of deferred tax assets that can be recognised,
based upon the likely timing and the level of future
taxable profits, together with future tax planning
strategies. The utilisation of the Group’s net deferred
tax asset at 30 June 2016 of US$36.3M is dependent on
future profits arising in the Namibian tax jurisdiction
in excess of those arising from the reversal of
deferred tax liabilities. Although the Group’s result
in the current period in the Namibian tax jurisdiction
was a loss, management has assessed that the
utilisation of the deferred tax asset is probable, due
to the Group’s forecast future taxable income in that
the jurisdiction (refer to Note 20 for further disclosure
of the key inputs into the forecast pre-tax cash flows
for the LHU mine) and the Group’s history of utilising
Namibian tax losses.
income
Unrecognised deferred
tax assets are
reassessed at each reporting date and are recognised
to the extent that it has become probable that future
taxable profit will allow the deferred tax asset to be
recovered.
The following reflects the income and share data
used in the basic and diluted earnings per share
computations:
2016
US$M
2015
US$M
(122.0)
(267.8)
2016
Number
of Shares
2015
Number
of Shares
1,707,894,118
1,417,331,645
547,320,310
552,056,462
Net loss attributable to
ordinary equity holders
of the Parent from
continuing operations
Weighted average
number of ordinary
shares for basic and
diluted earnings per
share
Total number of
securities not included
in weighted average
calculation due to their
antidilutive nature in the
current period, that could
potentially dilute basic
earnings per share in the
future
Recognition and measurement
Basic Earnings Per Share
Basic earnings per share are calculated by dividing the
profit attributable to equity holders of the Company
by the weighted average number of ordinary shares
outstanding during the period.
Diluted Earnings Per Share
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account the after income tax effect associated
with dilutive potential ordinary shares and the
weighted average number of shares assumed to have
been issued for no consideration in relation to dilutive
potential ordinary shares. Diluted earnings per share
is the same as basic earnings per share in 2016 and
2015 as the Group is in a loss position.
113
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 15. RECONCILIATION OF EARNINGS AFTER INCOME TAX TO NET CASH FLOW FROM
OPERATING ACTVITIES
Reconciliation of Net Loss After Tax to Net Cash Flows Provided by/(Used in) Operating Activities
2016
US$M
2015
US$M
(144.4)
(300.1)
22.7
(2.2)
-
(9.2)
0.5
20.0
21.6
1.1
1.5
-
1.3
(3.2)
6.4
(2.5)
174.1
(83.4)
4.3
25.0
(1.0)
(0.6)
(4.3)
0.5
24.5
8.0
1.0
2.9
238.9
0.5
19.4
(6.0)
6.0
(1.4)
(38.0)
(24.7)
Net loss
Adjustments for
Depreciation and amortisation
Gain on repayment of convertible bonds
Gain on disposal of investments
Net exchange differences
Share-based payments
Non-cash financing costs
Inventory impairment and obsolescence expense
Asset impairments
Available-for-sale asset impairment
Exploration impairment
Changes in assets and liabilities
Decrease in prepayments
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
(Decrease)/increase in provisions
Decrease/(increase) in inventories
Increase/(decrease) in deferred tax liabilities
Net cash flows provided by/(used in) by operating activities
OPERATING ASSETS AND LIABILITIES
NOTE 16. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
GST and VAT
Sundry debtors
Total current
receivables
Notes
2016
US$M
2015
US$M
(a)
(b)
1.0
9.8
1.4
12.2
2.1
5.6
1.8
9.5
approximates fair value due to the short-term nature
of the receivables. An allowance for doubtful debts
is made when there is objective evidence that a
trade receivable is impaired. No allowance has been
recognised for the current year or the previous year.
[b] GST and VAT debtor relates to Australia, Namibia,
Malawi, Netherlands and Canada.
Non Current
Sundry debtors
2016
US$M
2015
US$M
1.2
1.2
0.6
0.6
[a] Trade receivables are non-interest bearing and
are generally on 30 day terms. Carrying value
Total non current receivables
114
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 Recognition and measurement
Impairment of Inventories
Loans and Receivables
Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are
not quoted in an active market. They arise when the
Group provides money, goods or services directly to a
debtor with no intention of selling the receivable. They
are included in current assets, except for those with
maturities greater than 12 months after the balance
date which are classified as non current assets.
Collectability of trade receivables is reviewed on
an ongoing basis. Debts that are known to be
uncollectible are written off when identified. An
allowance for doubtful debts is raised when there is
objective evidence that the group will not be able to
collect the debt. Financial difficulties of the debtor,
default payments or debts more than 60 days overdue
are considered objective evidence of impairment.
NOTE 17. INVENTORIES
Current
Stores and consumables (at cost)
Ore Stockpiles (at cost)
Work in progress (at net realisable
value)
2016
US$M
2015
US$M
8.6
-
5.1
11.1
19.8
9.4
Finished goods (at cost)
-
35.0
During 2016, the carrying value of ore stockpiles held
at LHM was reduced to net realisable value resulting
in an impairment loss of US$168.9M (2015: US$Nil)
for the year, recognised in other expenses. A change
in LHM’s life of mine plan, in order to reduce costs
and improve cashflows, has resulted in a change in
the timescale for processing the ore stockpiles. The
stockpiles are now forecast to be processed over the
next three years compared to nine years under the
previous life of mine plan. The lower short-term
forecast prices over the next three years compared
to medium to long-term forecast prices, when the
stockpiles were originally planned to be processed,
has resulted in the net realisable value at 30 June
2016 being estimated as US$Nil. The net realisable
value of the ore stockpiles is dependent on a number
of key factors including: uranium price (for which a
combination of spot and forward pricing has been
used for the next three years), future processing
costs, grade and recovery rates.
During 2016, work-in-progress held at LHM was
reduced to net realisable value resulting in an
impairment loss of US$14.6M (2015: US$8.0M) for the
year, recognised in cost of sales.
During 2016, finished goods held at LHM were reduced
to net realisable value resulting in an impairment loss
of US$4.6M (2015: US$Nil) for the year, recognised in
cost of sales.
During 2016 stores and consumables held at KM
were reduced by US$2.4M (2015: US$Nil) due to
obsolescence. This resulted in an obsolescence
expense recognised in other expenses.
Finished goods (at net realisable value)
22.2
-
Recognition and measurement
Total current inventories at the lower
of cost and net realisable value
35.9
75.3
Non Current
Ore Stockpiles (at cost)
Total non current inventories at the
lower of cost and net realisable value
-
-
156.3
156.3
2015 – Ore Stockpiles at LHM that are unlikely to be
processed within 12 months of the balance sheet
date are classified as non current.
Inventory Expense
Inventories sold recognised as an expense for the
year ended 30 June 2016 totalled US$152.5M (2015:
US$189.7M) for the Group.
Consumable stores inventory are valued at the lower
of cost and net realisable value using the weighted
average cost method, after appropriate allowances
for redundant and slow moving items.
Finished goods and work in progress inventory are
valued at the lower of cost and net realisable value
using the weighted average cost method. Cost is
derived on an absorption costing basis, including both
fixed and variable production costs and attributable
overheads incurred up to the delivery point where
legal title to the product passes. No accounting value
is attributed to stockpiles containing ore at less than
the cut-off grade.
The costs of production include labour costs, materials
and contractor expenses which are directly attributable
to the extraction and processing of ore (including any
recognised expense of stripping costs); the depreciation
of property, plant and equipment used in the extraction
and processing of ore; and production overheads.
115
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 17. INVENTORIES (CONTINUED)
Recognition and measurement
Significant Estimates and Assumptions
Net Realisable Value of Inventories
The Group reviews the carrying value of inventories
regularly to ensure that their cost does not exceed net
realisable value. In determining net realisable value
various factors are taken into account, including sales
prices and costs to complete inventories to their final
form.
NOTE 18. ASSETS CLASSIFIED AS HELD FOR
SALE
Plant and equipment
Total assets classified as held for sale
2016
US$M
2015
US$M
-
-
2.8
2.8
As a result of KM being placed on care and
maintenance, the Company made a decision to sell its
aircraft and on 23 November 2015 a sale agreement
was signed. The sale was completed in January
2016. An impairment expense of US$0.3M has been
recorded in the ‘Unallocated’ portion of the segment
information.
financial assets, comprising
Available-for-sale
securities, are
principally marketable equity
non-derivatives
in
this category or not classified in any of the other
categories. They are included in non current assets
unless management
intends to dispose of the
investment within 12 months of the balance date.
that are either designated
Purchases and sales of investments are recognised
on trade-date which is the date on which the Group
commits to purchase or sell the asset. Investments are
initially recognised at fair value plus transaction costs.
Financial assets are de-recognised when the rights to
receive cash flows from the financial assets have expired
or have been transferred and the Group has transferred
substantially all the risks and rewards of ownership.
Available-for-sale financial assets are subsequently
carried at fair value. Unrealised gains and losses
which arise from changes in the fair value of non
monetary securities classified as available-for-sale
are recognised in other comprehensive income. When
securities classified as available-for-sale are sold or
impaired, the accumulated fair value adjustments are
included in the Income Statement as gains and losses
from investment securities.
Fair value of Financial Instruments
The fair values of quoted investments are based on
current bid prices.
NOTE 19. OTHER FINANCIAL ASSETS
Impairment of Financial Instruments
The Group assesses at each balance date whether
there is objective evidence that a financial asset or
group of financial assets is impaired. In the case
of equity securities classified as available-for-
sale, a significant or prolonged decline in the fair
value of a security below its cost is considered in
determining whether the security is impaired. If any
such evidence exists for available-for-sale financial
assets, the cumulative loss which is measured as
the difference between the acquisition cost and the
current fair value, less any impairment loss on that
financial asset previously recognised in profit and
loss is removed from equity and recognised in the
Income Statement. Any subsequent increase in value
is recognised in equity.
2016
US$M
2015
US$M
Non Current
Available-for-sale financial assets
Total non current other financial assets
0.9
0.9
2.6
2.6
The Group has an investment in DYL and at 30 June
2016 held 319,106,156 (2015: 319,106,156) fully paid
ordinary shares. The holding of these fully paid
ordinary shares represents a 16.5% interest at 30
June 2016 (2015: 16.7%) of the ordinary shares
of DYL, a uranium explorer listed on the ASX. The
market value of the shares in DYL at 30 June 2016 is
A$1.3M (US$0.9M) (2015: A$3.2M / US$2.4M) based
on a share price of 0.4 Australian cents per share
(2015: 1.0 Australian cents).
At 30 June 2015 the Group held minor investments in
other companies.
116
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 20. PROPERTY, PLANT AND
EQUIPMENT
2016
US$M
2015
US$M
Plant and equipment – at cost
721.4
720.6
Less accumulated depreciation
and impairment
Net carrying value plant and
equipment
Land and buildings - at cost
Less accumulated depreciation
and impairment
Net carrying value land and
buildings
Construction work in progress – at
cost
Less impairment
Net carrying value construction
work in progress
(473.5)
(456.2)
247.9
264.4
10.3
(3.7)
6.6
2.3
-
2.3
10.6
(2.7)
7.9
1.4
-
1.4
Net carrying value property, plant
and equipment
256.8
273.7
Property, Plant and Equipment Pledged as Security
for Liabilities
Refer to Note 7 for information on property, plant
and equipment pledged as security.
1.4
3.3
-
-
(1.1)
(1.3)
-
-
2.6
8.5
Reconciliations
Reconciliations of the carrying amounts of each
class of property, plant and equipment at the
beginning and end of the year are set out below:
Total
US$M
Plant
and
Equipment
US$M
Land and
Buildings
US$M
Construction
Work in
Progress
US$M
2016
Net carrying
value at start of
year
273.7
264.4
Additions
3.7
0.4
7.9
-
(18.2)
(17.8)
(0.4)
(0.8)
-
(1.3)
(0.2)
(0.1)
-
(0.8)
1.1
-
(0.2)
-
-
-
-
(0.1)
256.8
247.9
6.6
2.3
Depreciation and
amortisation
expense
Impairment of
assets
Reclassification
of assets
Reclassification
to mine
development
Disposal of
assets
Foreign currency
translation
Net carrying
value at end of
year
2015
Net carrying
value at start of
year
281.8
270.5
8.7
Additions
10.5
2.0
-
Depreciation and
amortisation
expense
Reclassification
of assets
Reclassification
to mine
development
Foreign currency
translation
Net carrying
value at end of
year
(17.8)
(17.2)
(0.4)
(0.2)
-
9.3
0.1
(9.4)
(0.1)
-
-
(0.1)
(0.7)
(0.2)
(0.5)
-
273.7
264.4
7.9
1.4
Recognition and measurement
All property, plant and equipment are stated at
historical cost
less accumulated depreciation
and impairment losses. Historical cost includes
expenditure that
is directly attributable to the
acquisition of the items.
117
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 20. PROPERTY, PLANT AND
EQUIPMENT (CONTINUED)
included
Subsequent costs are
in the asset’s
carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will flow
to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are
charged to the Income Statement during the financial
period in which they are incurred.
Property, plant and equipment costs include both
the costs associated with construction of equipment
associated with establishment of an operating mine,
and the estimated costs of dismantling and removing
the asset and restoring the site on which it is located.
Land is not depreciated. Depreciation on other assets
is calculated using either the unit of production
basis or the straight line method to allocate their
cost amount, net of their residual values, over their
estimated useful lives, as follows:
• Buildings: 20 years
• Databases: 10 years
• Plant and equipment: 2-6 years
• Leasehold improvements: period of lease
• Mine plant and equipment: lesser of life of asset
and unit of production basis
An asset’s carrying amount
is written down
immediately to its recoverable amount if the asset’s
its estimated
carrying amount
recoverable amount.
is greater than
Gains and losses on disposals are determined by
comparing proceeds with carrying amounts. These
are included in the Income Statement.
Assets that have an indefinite useful life are not
subject to amortisation and are tested annually for
impairment. Assets that are subject to amortisation
are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss
is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s
fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash
flows are discounted to their present value using a
pre-tax discount rate that reflects current market
assessments of the time value of money and the risks
specific to the asset. For the purposes of assessing
impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash flows
(cash generating units).
Significant Estimates and Assumptions
Impairment of Property, Plant and Equipment; Mine
Development and Intangibles
Property, plant and equipment; mine development
and intangibles are tested for impairment whenever
events or changes in circumstances indicate that the
carrying value may not be recoverable.
The Group conducts an internal review of asset values
at each reporting date, which is used as a source of
information to assess for any indicators of impairment.
Factors, such as changes
in uranium prices,
production performance and mining and processing
costs are monitored to assess for indicators of
impairment. If any indication of impairment exists,
an estimate of the asset’s recoverable amount is
calculated.
An impairment loss is recognised for the amount
by which the asset’s carrying amount exceeds its
recoverable amount. Recoverable amount is the higher
of an asset’s fair value less costs to sell and value
in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which
there are separately identifiable cash inflows that are
largely independent of the cash inflows from other
assets or groups of assets (cash-generating units).
The future recoverability of the property, plant and
equipment, mine development and intangibles is
dependent on a number of key factors including:
uranium price, discount rates used in determining the
estimated discounted cash flows, foreign exchanges
rates, tax rates, the level of proved and probable
reserves and measured,
inferred
mineral resources, future technological changes
which could impact the cost of production and future
legal changes, including changes to environmental
restoration obligations.
indicated and
The recoverable value of the LHM property, plant and
equipment has been determined based on value in
use (VIU). VIU calculation use pre-tax free cash flows
based on financial projections for the approved life of
mine plan (LOM). The key operating assumptions and
their basis of estimation are:
• Future production based on the latest LOM
and using a recovery factor of 87.8% per
management’s best estimates.
• Commodity price forecast ranging from
US$26/lb to US$68/lb per TradeTech forecast
pricing.
• Exchange rate forecast of USD/NAD ranging
from 14.00 to 16.00 derived from external
currency forecasters.
118
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 • Future cost of production ranging from
US$18.00/lb to US$28.63/lb based on the current
budget and management’s best estimates.
• Discount rate applied to cash flow projections of
a units-of-production method. The capitalisation of
development stripping costs ceases when the mine/
component is commissioned and ready for use as
intended by management.
8.5%.
These estimates and assumptions are subject to
risk and uncertainty. Therefore there is a possibility
that a change in circumstances will impact these
projections, which may
impact the recoverable
amount.
NOTE 21. MINE DEVELOPMENT
2016
US$M
2015
US$M
Mine development – at cost
214.4
213.1
Less accumulated depreciation and
impairment
(174.6)
(170.1)
Net carrying value – mine
development
39.8
43.0
Net carrying value at start of year
43.0
43.9
Additions
-
-
Stripping activities undertaken during the production
phase of a surface mine (production stripping)
are accounted for as set out below. After the
commencement of production, further development
of the mine may require a phase of stripping that is
similar in nature to development phase stripping. The
costs of such stripping are accounted for in the same
way as development stripping (as outlined above).
Stripping costs incurred during the production phase
are generally considered to create two benefits,
being either the production of inventory or improved
access to the ore to be mined in the future. Where
the benefits are realised in the form of inventory
produced in the period, the production stripping costs
are accounted for as part of the cost of producing
those inventories. Where the benefits are realised
in the form of improved access to ore to be mined in
the future, the costs are recognised as a non-current
asset, referred to as a stripping activity asset, if the
following criteria are met:
(4.5)
(7.5)
the ore body) are probable;
[a] Future economic benefits (being improved access to
Depreciation and amortisation
expense
Effects in changes of underlying
assumptions & discount rates
Reclassification from property,
plant and equipment
Disposals
-
1.3
-
6.5
0.1
-
Net carrying value at end of year
39.8
43.0
Recognition and measurement
Mine development
Pre-production costs are deferred as development
costs until such time as the asset is capable of being
operated in a manner intended by management
and depreciated on a units of production basis.
Post-production costs are recognised as a cost of
production.
Stripping (waste removal) costs
As part of its mining operations, the Group incurs
stripping (waste removal) costs both during the
development phase and production phase of
its operations. Stripping costs
in the
development phase of a mine, before the production
phase commences
(development stripping), are
capitalised as part of the cost of constructing the mine
and subsequently amortised over its useful life using
incurred
[b] The component of the ore body for which access will
be improved can be accurately identified; and
[c] The costs associated with the improved access can be
reliably measured.
If all of the criteria are not met, the production
stripping costs are charged to the statement of profit
or loss as operating costs as they are incurred.
In identifying components of the ore body, the Group
works closely with the mining operations personnel
for each mining operation to analyse each of the
mine plans. Generally, a component will be a subset
of the total ore body, and a mine may have several
components. The mine plans, and therefore the
identification of components, can vary between mines
for a number of reasons. These include, but are not
limited to: the geological characteristics of the ore
body, the geographical location, and/or financial
considerations.
119
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 21. MINE DEVELOPMENT (CONTINUED)
Proved and Probable Reserves
The Group uses the concept of a life of mine as
an accounting value to determine such things as
depreciation rates and the appropriate period to
discount mine closure provisions. In determining life
of mine, the proved and probable reserves measured
in accordance with the 2004 edition of the JORC Code
specific to a mine are taken into account which by
their very nature require judgements, estimates and
assumptions.
The stripping activity asset is initially measured
at cost, which is the accumulation of costs directly
incurred to perform the stripping activity that
improves access to the identified component of ore,
plus an allocation of directly attributable overhead
costs. If incidental operations are occurring at the
same time as the production stripping activity, but are
not necessary for the production stripping activity to
continue as planned, these costs are not included in
the cost of the stripping activity asset.
If the costs of the inventory produced and the stripping
activity asset are not separately identifiable, a relevant
production measure is used to allocate the production
stripping costs between the inventory produced and
the stripping activity asset. This production measure
is calculated for the identified component of the ore
body and is used as a benchmark to identify the extent
to which the additional activity of creating a future
benefit has taken place. The Group uses the expected
volume of waste extracted compared with the actual
volume for a given volume of ore production of each
component.
The stripping activity asset is accounted for as an
addition to, or an enhancement of, an existing asset,
being the mine asset, and is presented as part of ’Mine
Development’ in the statement of financial position.
The stripping activity asset
is subsequently
depreciated using the units-of-production method
over the life of the identified component of the ore
body that became more accessible as a result of the
stripping activity. Economically recoverable reserves,
which comprise proven and probable reserves, are
used to determine the expected useful life of the
identified component of the ore body. The stripping
activity asset is then carried at cost less depreciation
and any impairment losses.
Significant Judgements, Estimates and Assumptions
The Group has assessed that the useful lives of the
individual identifiable components of the relative ore
bodies are short and that the strip ratio over the life
of component is relatively uniform. Accordingly, the
Group has accounted for production stripping costs
as a production cost in the years ended 30 June 2015
and 2016.
120
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 22. EXPLORATION AND EVALUATION EXPENDITURE
The following table details the expenditures on interests in mineral properties by area of interest for the year
ended 30 June 2016:
Areas of interest
Valhalla
/Skal (1)
Isa
North
Fusion
Angela
Pamela
Bigrlyi
Carley
Bore (2)
Canada
Other
Uranium
Projects
Total
US$M
US$M
US$M
US$M
US$M
US$M
US$M
US$M
US$M
Balance 30 June 2015
89.6
10.4
Acquisition property
payments
Project exploration and
evaluation expenditure
Labour
Outside services
Other expenses
Total expenditure
-
-
-
0.1
0.1
-
-
0.1
0.2
0.3
-
-
-
0.1
-
0.1
-
-
-
-
0.1
0.1
-
-
-
-
0.1
0.1
Expenditure expensed
(0.1)
(0.3)
(0.1)
(0.1)
(0.1)
Expenditure capitalised
-
-
Foreign exchange
differences
Impairment of exploration
and evaluation
(0.5)
(0.4)
-
Balance 30 June 2016
89.1
10.0
-
-
-
-
-
-
-
-
-
-
-
-
-
230.4
7.5
337.9
7.6
-
-
7.6
0.1
-
0.3
0.4
-
0.4
0.4
-
0.8
0.2
1.0
2.0
(0.2)
1.8
0.1
0.2
0.1
0.4
1.0
0.6
1.9
3.5
-
(0.9)
0.4
2.6
(11.5)
-
(12.0)
-
-
8.4
220.7
7.9
336.1
AU$0.18c per share based on the market price at that
date. US$0.6M acquisition costs were capitalised to
the exploration and evaluation asset
[1] Summit has a 50% interest in the Valhalla/Skal
Projects with the other 50% interest held by the
Paladin Group. As a consequence of the takeover of
the Summit Group, the above table now reflects 100%
of the Valhalla/Skal Projects with the non-controlling
interest reflected on the face of the Statement of
Financial Position.
[2] On 7 August 2015, Paladin acquired the Carley
Bore Uranium Deposit in Western Australia for
consideration comprising US$1.2M (A$1.6M) cash
and 45 million Paladin Energy Ltd shares. Due to
the nature of the asset as an early stage exploration
project, the fair value of the asset was not able to be
measured reliably and therefore the 45 million shares
issued were valued at the date of completion, being
121
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 22. EXPLORATION AND EVALUATION EXPENDITURE (CONTINUED)
The following table details the expenditures on interests in mineral properties by area of interest for the year
ended 30 June 2015:
Areas of interest
Valhalla
/Skal
Isa
North
Fusion
Angela
Pamela
Bigrlyi Niger
KM
LHM Canada
Other
Uranium
Projects
Total
US$M
US$M US$M
US$M
US$M US$M US$M US$M
US$M
US$M
US$M
Balance 30 June 2014
332.5
60.5
11.3
Acquisition property
payments
Project exploration and
evaluation expenditure
Labour
Outside services
Other expenses
Total expenditure
-
-
0.1
-
0.2
0.3
0.1
-
0.2
0.3
-
-
-
0.1
0.1
-
-
-
-
10.3
-
-
-
0.1
0.1
0.1
0.1
Expenditure expensed
(0.3)
(0.3)
(0.1)
(0.1)
(0.1)
Expenditure capitalised
-
-
-
Foreign exchange
differences
(61.2)
(11.9)
(2.1)
Write off of Spinifex Well
-
-
-
Impairment
of exploration
and evaluation
(181.7)
(38.2)
(9.2)
Balance 30 June 2015
89.6
10.4
-
-
-
-
-
-
-
(1.9)
-
(8.4)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.1
-
0.1
0.2
(0.2)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
263.3
9.4
687.3
-
0.4
0.4
1.7
0.4
1.3
3.4
0.6
0.1
0.5
1.2
2.6
0.5
2.6
5.7
(0.1)
(0.4)
(1.6)
3.3
0.8
4.1
(36.2)
(1.7)
(115.0)
-
-
(1.4)
(1.4)
-
(237.5)
230.4
7.5
337.9
Recognition and measurement
Exploration and evaluation expenditure related to
areas of interest is capitalised and carried forward to
the extent that:
of interest, or alternatively by sale, costs are expensed
in the period in which they are incurred.
[1] rights to tenure of the area of interest are current; and
[2] costs are expected to be recouped through successful
development and exploitation of the area of interest or
alternatively by its sale.
Exploration and evaluation expenditure is allocated
separately to specific areas of
Such
expenditure comprises net direct costs and an
appropriate portion of related overhead expenditure
directly related to activities in the area of interest.
interest.
Costs related to the acquisition of properties that
contain Mineral Resources are allocated separately
to specific areas of interest.
If costs are not expected to be recouped through
successful development and exploitation of the area
is
Exploration and evaluation expenditure that
capitalised is included as part of cash flows from
investing activities, whereas exploration and
evaluation expenditure that is expensed is included
as part of cash flows from operating activities.
When a decision to proceed to development is made,
the exploration and evaluation capitalised to that
area is transferred to mine development. All costs
subsequently incurred to develop a mine prior to the
start of mining operations within the area of interest
are capitalised and carried at cost. These costs
include expenditure incurred to develop new ore
bodies within the area of interest, to define further
mineralisation in existing areas of interest, to expand
the capacity of a mine and to maintain production.
122
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 Capitalised amounts for an area of interest may be
written down to their recoverable amount if the area
of interest’s carrying amount is greater than their
estimated recoverable amount.
Significant Estimates and Assumptions
Carrying Value of Exploration and Evaluation
Expenditure
The Group reviews the carrying value of exploration
and evaluation expenditure at each reporting date.
This requires judgement as to the status of the
individual projects and their future economic value.
NOTE 23. INTANGIBLE ASSETS
2016
US$M
2015
US$M
Description of the Group’s Intangible Assets
[1] Right to supply of power
◦ LHUPL has entered into a contract with
NamPower in Namibia for the right to access
power at LHM. In order to obtain this right,
the power line connection to the mine was
funded by LHM. However, ownership of
the power line rests with NamPower. The
amount funded is being amortised on a unit of
production basis.
[2] Right to supply of water
◦ LHUPL has entered into a contract with
NamWater in Namibia for the right to access
water at LHM. In order to obtain this right,
the water pipeline connection to the mine
was funded by LHM. However, ownership
of the pipeline rests with NamWater. The
amount funded is being amortised on a unit of
production basis.
At 30 June
Intangible assets – at cost
27.8
27.8
Recognition and measurement
Less accumulated depreciation and
impairment
(16.7)
(16.1)
Net carrying value – intangible
assets
11.1
11.7
Amortisation of US$0.6M (2015: US$0.5M) is included
in cost of sales in the Income Statement.
Movements in Intangible Assets
Movements in each group of intangible asset during
the financial year are set out below:
Right
to Supply
of Power
US$M
Right
to Supply
of Water
US$M
Total
US$M
3.5
(0.2)
3.3
3.6
(0.1)
3.5
8.2
11.7
(0.4)
(0.6)
7.8
11.1
8.6
12.2
(0.4)
(0.5)
8.2
11.7
2016
Net carrying value at
1 July 2015
Amortisation expense
Net carrying value at
30 June 2016
2015
Net carrying value at
1 July 2014
Amortisation expense
Net carrying value at
30 June 2015
Intangible assets acquired separately or in a business
combination are initially measured at cost. The
cost of an intangible asset acquired in a business
combination is its fair value as at the date of acquisition.
Following initial recognition, intangible assets are
carried at cost less any accumulated amortisation
and any accumulated impairment losses. Internally
generated intangible assets, excluding capitalised
development costs, are not capitalised and
expenditure is recognised in the Income Statement in
the year in which the expenditure is incurred.
The useful lives of intangible assets are assessed to be
either finite or indefinite. Intangible assets with finite
lives are amortised over the useful life and tested for
impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation
period and the amortisation method for an intangible
asset with a finite useful life are reviewed at least at
each financial year-end. Changes in the expected
useful life or the expected pattern of consumption
of future economic benefits embodied in the asset
are accounted for prospectively by changing the
amortisation period or method, as appropriate, which
is a change in accounting estimate. The amortisation
expense on the intangible assets with finite lives is
recognised in profit or loss in the expense category
consistent with the function of the intangible asset.
123
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 23. INTANGIBLE ASSETS (CONTINUED)
A summary of the policies applied to the Group’s
intangible assets is as follows:
NOTE 25. PROVISIONS
Note
2016
US$M
2015
US$M
Right to use water and power supply
Useful lives
Life of mine
Amortisation method
used
Amortised over the life of the mine
on a unit of production basis
Impairment testing
Annually and more frequently
when an indication of impairment
exists. The amortisation method is
reviewed at each financial year-end.
The rights to use water and power supply have been
granted for a minimum of 17 years from April 2007
by the relevant utilities with the option of renewal
without significant cost at the end of this period.
Current
Employee benefits
Total current provisions
Non Current
Employee benefits
Rehabilitation provision
Demobilisation provision
Total non current
provisions
12
12
2.2
2.2
0.1
77.9
1.3
3.5
3.5
1.4
82.5
1.5
79.3
85.4
NOTE 24. TRADE AND OTHER PAYABLES
Current
Trade and other payables
Total current payables
2016
US$M
2015
US$M
31.5
31.5
30.4
30.4
Trade payables are non-interest bearing and are
normally settled on 30 day terms.
Recognition and measurement
Trade and other payables are carried at amortised
cost and represent liabilities for goods and services
provided to the Group prior to the end of the financial
year that are unpaid and arise when the Group
becomes obliged to make future payments in respect
of the purchase of these goods and services. The
amounts are unsecured and are usually paid within
30 days of recognition.
Movements in Provisions
Movements in each class of provision during the
financial year, excluding provisions relating to
employee benefits, are set out below:
Demobilisation
US$M
Rehabilitation
US$M
Total
US$M
At 1 July 2015
Arising
during the
year
Foreign
currency
movements
At 30 June
2016
2016
Current
Non current
Total
2015
Current
Non current
Total
1.5
0.1
(0.3)
1.3
-
1.3
1.3
-
1.5
1.5
82.5
84.0
2.8
2.9
(7.4)
(7.7)
77.9
79.2
-
-
77.9
79.2
77.9
79.2
-
-
82.5
84.0
82.5
84.0
124
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 Nature and Timing of Provisions
Employee benefits
Rehabilitation
Short-term benefits
A provision for rehabilitation and mine closure has
been recorded in relation to LHM and KM. A provision
is made for rehabilitation work when the obligation
arises and this is recognised as a cost of production
or development as appropriate. Additionally the
provision includes the costs of dismantling and
demolition of infrastructure or decommissioning,
the removal of residual material and the remediation
of disturbed areas specific to the infrastructure to a
state acceptable to various authorities. The provision
is estimated using the assumption that remediation
will not take place until 3 to 19 years’ time.
Liabilities for short-term benefits, including wages
and salaries, and accumulating sick leave expected
to be settled within 12 months of the reporting
date are recognised as a current liability in respect
of employees’ services up to the reporting date
and are measured at the amounts expected to be
paid when the liabilities are settled. Liabilities for
non-accumulating sick leave are recognised when
the leave is taken and measured at the rates paid or
payable.
Long Service Leave
The liability for long service leave is recognised in
the provision for employee benefits and measured as
the present value of expected future payments to be
made in respect of services provided by employees
up to the reporting date. Consideration is given to
expected future wage and salary levels, experience of
employee departures and periods of service. Expected
future payments are discounted using market yields
at the reporting date on corporate bonds with terms
to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
Significant Accounting Judgements, Estimates and
Assumptions
Rehabilitation Provision
The value of this provision represents the discounted
value of the present obligation to rehabilitate the
mine and to restore, dismantle and close the mine.
The discounted value reflects a combination of
management’s assessment of the cost of performing
the work required, the timing of the cash flows and
the discount rate. A change in any, or a combination,
of the three key assumptions (estimated cash flows,
discount rates or inflation rates), used to determine
the provision could have a material impact to the
carrying value of the provision.
Demobilisation
A provision for demobilisation has been recorded
in relation to LHM for the costs of demobilising the
mining contractor.
Recognition and measurement
Provisions
Mine closure and restoration costs include the costs
of dismantling and demolition of infrastructure or
decommissioning, the removal of residual material
and the remediation of disturbed areas specific to the
infrastructure. Mine closure costs are provided for
in the accounting period when the obligation arising
from the related disturbance occurs, whether this
occurs during the mine development or during the
production phase, based on the net present value of
estimated future costs.
As the value of the provision for mine closure
represents the discounted value of the present
obligation to restore, dismantle and close the mine,
the increase in this provision due to the passage of
time is recognised as a finance cost. The discount
rate used is a pre-tax rate that reflects the current
market assessment of the time value of money and
the risks specific to the liability.
Provision is made for rehabilitation work when the
obligation arises and this is recognised as a cost of
production or development. The rehabilitation costs
provided for are the present value of the estimated
costs to restore operating locations. The value of
the provision represents the discounted value of the
current estimate to restore and the discount rate used
is the pre-tax rate that reflects the current market
assessments of the time value of money and the risks
specific to the liability.
125
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 26. UNEARNED REVENUE
OTHER NOTES
2016
US$M
2015
US$M
Details of Key Management Personnel
NOTE 27. KEY MANAGEMENT PERSONNEL
Non Current
Unearned revenue
Total unearned revenue
(i)
Directors
200.0
200.0
200.0
200.0
Mr Rick Crabb
Chairman (Non-executive)
Mr John Borshoff
Managing Director/CEO
(resigned 10 August 2015)
Recognition and measurement
Mr Donald Shumka
Director (Non-executive)
In 2012, Paladin entered into a six-year off-take
agreement with EdF, a major electricity generator
and distribution company in France, to deliver a total
of 13.73Mlb U3O8 in the period from 2019 to 2024.
Uranium sold to EdF under the contract will be at
prevailing spot prices at the time of delivery, subject
to escalating floor and ceiling prices, with the floor
price being at a significant premium to both current
spot and long term reference prices. The off-take is
an obligation of the Company and it is intended to
be fulfilled through the acquisition of U3O8 from the
Company’s operating assets and joint ventures at the
time of delivery.
Under this agreement, a US$200M cash prepayment
was received in 2012. The prepayment related
to 44.51% of the total volume to be delivered under
the contract, at the present value of the contracted
floor price, determined using an imputed interest rate
of 7.619%.
The Group’s accounting policy is to recognise revenue
from the long-term off-take agreement as a payment
for future product to be delivered. Advance customer
payments are unearned revenues at the time of
receipt.
Under the Group’s accounting policy, the unearned
revenue is not accreted to the future value of the
contracted floor price that has been prepaid. When
the product is delivered to the customer, the unearned
revenue will be released to the income statement at
its original carrying value.
The Company has granted EdF security over 60.1%
of the Michelin project in Canada. Under certain
circumstances, the company may elect, or be
required to replace the Michelin security with other
appropriate security.
Mr Peter Donkin
Director (Non-executive)
Mr Philip Baily
Director (Non-executive)
Mr Wendong Zhang
Director (Non-executive)
Mr Sean Llewelyn
Director (Non-executive)
(resigned 21 August 2015)
(ii)
Executives
Mr Alexander
Molyneux
Chief Executive Officer
(appointed 10 August 2015)
Mr Craig Barnes
Chief Financial Officer
Ms Gillian Swaby
Group Company Secretary and Executive
General Manager – Corporate Services
(resigned 21 August 2015)
Mr Dustin Garrow
Executive General Manager – Marketing
(resigned 21 August 2015)
Compensation of Key Management Personnel:
Compensation by Category
Short-term employee
benefits
Post employment
benefits
Long-term benefits
Share-based payment
2016
US$’000
2015
US$’000
2,745
(141)
(109)
140
3,666
(371)
142
205
2,635
3,642
126
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 28. AUDITORS REMUNERATION
The auditor of the Paladin Energy Ltd Group is Ernst
& Young.
2016
US$’000
2015
US$’000
Amounts received or due and receivable by
Ernst & Young (Australia) for:
Audit or review of the financial report
of the consolidated Group
258
319
affect the integrity and objectivity of the auditor and
that the nature of the services provided does not
compromise the Code of Ethics for Professional
Accountants APES 110 issued by the Accounting
Professional and Ethical Standards Board.
All non-audit services provided by Ernst & Young were
allowable services that received the sign off of the audit
partner confirming that, in his professional opinion,
they do not in any way impair the independence of
the firm. Where any service might be perceived to be
subjective, Ernst & Young policy requires approval by
the Oceania Independence and Conflicts Leader.
Other services
Taxation services:
Tax compliance services
International tax consulting
Other tax advice
Sub-total
15
18
26
29
-
109
44
99
346
571
NOTE 29. COMMITMENTS AND
CONTINGENCIES
There were no outstanding commitments or
contingencies, which are not disclosed in the Financial
Report of the Group as at 30 June 2016 other than:
2016
US$M
2015
US$M
Amounts received or due and receivable by related practices of
Ernst & Young (Australia) for:
Tenements
75
129
Within one year
Commitments for tenements contracted for at the reporting
date but not recognised as liabilities, payable:
Later than one year but not later than 5
years
More than 5 years
0.9
11.9
0.6
9.8
7.5
11.2
Audit or review of the financial report
of subsidiaries and audit related
services
Taxation services:
Tax compliance services
International tax consulting
Other tax advice
Sub-total
12
-
38
45
-
23
125
197
The level of non-audit related fees was driven by the
tax compliance requirements of multiple jurisdictions
and by the specialist advice requirements of potential
acquisitions and group restructures.
Whilst always striving to meet the highest corporate
governance standards, Paladin is also cognisant
of the need to retain the value of the best available
specialist advice. Paladin engaged Ernst & Young
because of their specialised experience in both Africa
and the mining sector and Ernst & Young’s detailed
understanding of the Paladin Group.
In terms of the Company’s Corporate Governance
Policy all non-audit services are reviewed and
approved by
to
commencement to ensure that they do not adversely
the Audit Committee prior
Total tenements commitment
20.3
21.6
These include commitments relating to tenement
lease rentals and
the minimum expenditure
requirements of the Namibian, Malawian, Canadian,
Western Australian, South Australian, Northern
Territorian and Queensland Mines Departments
attaching to the tenements and are subject to
re-negotiation upon expiry of the exploration leases
or when application for a mining licence is made.
in order to maintain the
These are necessary
tenements in which the Group and other parties
are involved. All parties are committed to meet the
conditions under which the tenements were granted
in accordance with the relevant mining legislation in
Namibia, Malawi, Australia and Canada.
Operating Lease Commitments
The Group has entered
into various property
leases relating to rental of offices and residential
accommodation.
127
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 29. COMMITMENTS AND
CONTINGENCIES (CONTINUED)
These non-cancellable leases have remaining terms
of between 1 month and 60 months. All leases
include a clause to enable upward revision of rental
charge on an annual basis according to prevailing
market conditions.
Future minimum rentals payable under non-
cancellable operating leases as at 30 June are as
follows:
2016
US$M
2015
US$M
0.3
1.2
-
1.5
0.8
0.1
-
0.9
Within one year
Later than one year but not later than
5 years
More than 5 years
Total operating lease commitment
Other Commitments
Contingent Liability
A dispute arose between a Group company and a
contractor in relation to the contract for the Stage
3 expansion at LHM. The contractor was seeking
payment of a disputed sum of N$151.1M (30 June
2015: N$151.1M), which is approximately US$10.0M
(30 June 2015: US$12.0M). The Group denied the
claim and vigorously defended it. The Group also
counter claimed damages from the contractor
and cross-claimed from another contractor. The
precise quantum of the counter-claim and cross
claim was never established, however the merits
of the Company’s defences against the claims were
considered to be good, and it was expected that in
the final result the Company’s quantum was likely to
exceed any residual entitlement that may have been
due on the contractors’ claims.
LHM and the contractor have agreed to settle all
litigation associated with this matter, i.e. all claims
and counter claims. The parties have signed the
settlement documentation on the 19 July 2016 which
resulted in no payment being made by either party.
Commitments for mining, transport and reagents
contracted for at the reporting date but not recognised
as liabilities, payable:
NOTE 30. RELATED PARTIES
Key Management Personnel
The only related party transactions are with Directors
and Key Management Personnel. Refer to Note 27.
Details of material controlled entities are set out in
Note 32.
2016
US$M
2015
US$M
Within one year
10.8
15.3
Later than one year but not later
than 5 years
More than 5 years
-
-
1.9
-
Total other commitment
10.8
17.2
In relation to the Manyingee Uranium Project, the
for a
re-negotiated acquisition
payment of A$0.75M (US$0.56M) (2015: A$0.75M
(US$0.57M)) by the Group to the vendors when all
project development approvals are obtained.
terms provide
Bank Guarantees
(A$607,651)
(2015: US$465,180
As at 30 June 2016 the Group has outstanding
US$450,713
/
A$607,651) as a current guarantee provided by a
bank for the corporate office lease; a US$132,055
(A$172,500)
/ A$187,500)
guarantee for tenements; a US$95,408 (A$128,630)
for
(2015: US$98,471
corporate credit cards, and a US$10M (2015: US$10M)
KM environmental performance guarantee.
/ A$128,630) guarantee
(2015: US$143,538
128
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 31. SHARE BASED PAYMENT PLANS
2016
US$M
2015
US$M
Weighted Average Remaining Contractual Life
The weighted average remaining contractual life for
the Share Rights outstanding as at 30 June 2015 was
0.4 years (2016: N/A).
Share-based payment expense
0.5
0.5
Weighted Average Fair Value
Summaries of Share Rights Granted Under the Plans
The weighted average fair value of Share Rights
granted during 2015 was A$0.32. No Share Rights
were granted during 2016.
The following table illustrates the number of and
movements in Share Rights issued during the year:
Summaries of Options Granted Under the Plans
Outstanding at the beginning of
the year
Granted during the year(1)
Forfeited during the year
2016
Number
2015
Number
788,754
2,079,094
-
-
1,791,992
(694,260)
Share options granted to the CEO on his appointment
at 10 August 2015.
The following table illustrates the number of and
movements in Options rights issued during the year:
2016
Number
2015
Number
Vested during the year(2)
(788,754)
(2,388,072)
Outstanding at the beginning of
the year
-
Outstanding at the end of the year
-
788,754
Granted during the year(1)
3,000,000
[1] No Share Rights were granted under the Contractor
Plan (2015: 306,888).
[2] The weighted average share price at the vesting date
is A$0.22 (2015: A$0.35).
Forfeited during the year
Vested during the year
-
-
Outstanding at the end of the
year
3,000,000
-
-
-
-
-
[1] 3,000,000 Options were granted under the Contractor
Plan (2015: Nil).
The outstanding balance as at 30 June 2016 is represented by:
Date granted
Exercisable date
Expiry date
Fair value
Exercise price
Number
10 August 2015
10 August 2015
10 August 2018
A$0.07
A$0.20
1,000,000
10 August 2015
8 November 2015
8 November 2018
A$0.06
A$0.30
1,000,000
10 August 2015
23 December 2015
23 December 2018
A$0.06
A$0.40
1,000,000
Total
3,000,000
Weighted Average Remaining Contractual Life
The weighted average remaining contractual life for the Options outstanding as at 30 June 2016 is 2.3 years
(2015: N/A).
Weighted Average Fair Value
The weighted average fair value of Options granted during 2016 was A$0.06. No Options were granted during
2015.
129
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 31. SHARE BASED PAYMENT PLANS
(CONTINUED)
The following table illustrates the number of and
movements in Share Appreciation Rights issued
during the year:
Options Pricing Model
The fair value of the equity-settled share rights
granted under the plan is estimated as at the date of
grant using the Black-Scholes valuation model.
The following table lists the inputs to the models used
for the years ended 30 June 2016 and 30 June 2015.
2016
Number
2015
Number
Outstanding at the beginning of
the year
-
Granted during the year(1)
8,052,500
Forfeited during the year
(350,000)
2016
2015
Vested during the year(2)
(577,500)
Dividend yield (%)
Nil
N/A
Outstanding at the end of the
year
7,125,000
-
-
-
-
-
[1] 800,000 Share Appreciation Rights were granted under
the Contractor Plan (2015: Nil).
[2] The weighted average share price at the vesting date
is A$0.23 (2015:A$Nil).
Expected volatility (%)
65%
N/A
Risk-free interest rate (%)
Expected life of right (years)
1.97% -
2.06%
3.0 – 3.4
years
N/A
N/A
Closing share price at grant date (A$)
A$0.18
N/A
Summaries of Share Appreciation Rights (SARs)
Granted Under the Plans
SARs are entitlements to receive a number of shares
subject to remaining employed at the relevant vesting
date. At the relevant vesting date, the SARs will
vest and the holder will be able to exercise them at
the exercise price during the exercise period. The
exercise of SARs will occur on a cashless basis, i.e.
the holder will not have to make an actual payment
of the exercise price, but it will be taken into account
in calculating the number of shares allocated upon
exercise. SARs do not carry a right to vote or to
dividends or, in general, a right to participate in other
corporate actions such as bonus issues.
For each SAR that is validly exercised, the holder
will be allocated shares based on the formula below
(rounded up to the nearest whole share). The number
of shares a holder will receive will be calculated using
the following formulas:
Shares to receive = SARs being exercised x (A-B)/A
Where:
A = volume weighted average price (VWAP) of a share
for the five trading days before the date of exercise
B = exercise price (e.g. A$0.20)
Note: If A – B is less than or equal to zero at the time
of exercise, the relevant SARs being exercised will not
be exercised but will, instead, immediately lapse.
130
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 The outstanding balance as at 30 June 2016 is represented by:
Date granted
Exercisable date
Expiry date
Fair value
Exercise price
Number
20 October 2015
1 November 2016
1 November 2021
20 October 2015
1 November 2017
1 November 2022
20 October 2015
1 November 2018
1 November 2023
3 March 2016
1 November 2016
1 November 2021
3 March 2016
1 November 2017
1 November 2022
3 March 2016
1 November 2018
1 November 2023
Total
A$0.13
A$0.13
A$0.13
A$0.10
A$0.10
A$0.10
A$0.20
A$0.20
A$0.20
A$0.20
A$0.20
A$0.20
3,255,000
1,627,500
1,627,500
307,500
153,750
153,750
7,125,000
Weighted Average Remaining Contractual Life
Recognition and measurement
The weighted average remaining contractual life
for the Share Appreciation Rights outstanding as at
30 June 2016 is 6.3 years (2015: N/A).
Share-based compensation benefits are provided
to employees via the Employee Performance Share
Rights Plan and the Contractor Performance Share
Rights Plan (Rights Plans).
Weighted Average Fair Value
The fair value of rights granted under the Rights
Plans is recognised as an employee benefit expense
with a corresponding increase in equity. The fair
value is measured at grant date and recognised
over the period during which the employees become
unconditionally entitled to the rights.
The weighted average fair value of Share Appreciation
Rights granted during 2016 was A$0.13. No Share
Appreciation Rights were granted during 2015.
Rights Pricing Model
The fair value of the equity-settled share rights
granted under the plan is estimated as at the date of
grant using the Black-Scholes valuation model.
The following table lists the inputs to the models used
for the years ended 30 June 2016 and 30 June 2015.
2016
2015
Dividend yield (%)
Nil
Expected volatility (%)
62% - 65%
Risk-free interest rate (%)
Expected life of right (years)
Closing share price at grant date (A$)
2.03% -
2.09%
5.7 - 6
years
A$0.185 -
A$0.215
N/A
N/A
N/A
N/A
N/A
131
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 Tax Consolidation
Paladin and its 100% owned Australian resident
subsidiaries formed a tax consolidated group (the
Group) with effect from 1 July 2003. Paladin is the
head entity of the Group. Members of the Group have
entered into a tax-sharing agreement that provides
that the head entity will be liable for all taxes payable
by the Group from the consolidation date. The parties
have agreed to apportion the head entity’s taxation
liability within the Group based on each contributing
member’s share of the Group’s taxable income and
losses.
NOTE 32. GROUP INFORMATION
2016
US$M
2015
US$M
Information Relating to Paladin Energy Ltd
Current assets
9.0
120.4
Total assets
1,019.9
1,109.4
Current liabilities
212.0
8.0
Total liabilities
563.4
611.0
Issued capital
2,101.1
2,094.9
Accumulated losses
(1,786.3)
(1,737.4)
Option application reserve
Share-based payments reserve
Available-for-sale investment
revaluation reserve
Convertible bond non
distributable reserve
0.1
46.7
0.3
94.4
0.1
46.4
-
94.4
Total shareholders’ equity
456.3
498.4
Net loss after tax from operations
(48.9)
(72.2)
Total comprehensive loss
(55.2)
(174.3)
Details of Any Guarantees Entered Into by the Parent
in Relation to the Debts of its Subsidiaries
Paladin has provided a guarantee and indemnity
for the Project Finance Facility which supports the
Kayelekera Mine and for the Revolving Credit Facility
at Langer Heinrich.
Details of Any Contingent Liabilities of the Parent
Entity
Paladin has provided a guarantee of US$35.4M for the
LHM Environmental Trust Fund.
Details of Any Contractual Commitments by the
Parent Entity for the Acquisition of Property, Plant and
Equipment
There are no contractual commitments by the parent
entity for the acquisition of property, plant and
equipment as at reporting date.
132
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 Investments in Material Controlled Entities
NAME
COUNTRY OF
INCORPORATION
PERCENTAGE INTEREST
HELD
2016
%
2015
%
Paladin Finance Pty Ltd
Paladin Energy Minerals NL
PEM Malawi Pty Ltd
Eden Creek Pty Ltd
Paladin Asset Management Pty Ltd
Paladin (Africa) Limited
Paladin Netherlands BV
Paladin Netherlands Holdings Cooperatief U.A.
Langer Heinrich Mauritius Holdings Ltd
Langer Heinrich Uranium (Pty) Ltd
Valhalla Uranium Pty Ltd
Northern Territory Uranium Pty Ltd
Mount Isa Uranium Pty Ltd
Paladin Nuclear Ltd
Summit Resources Ltd
Summit Resources (Aust) Pty Ltd
Pacific Mines Pty Ltd
Paladin NT Pty Ltd
Paladin Intellectual Property Pty Ltd
Fusion Resources Pty Ltd
NGM Resources Pty Ltd
Indo Energy Ltd
Paladin Energy Canada Ltd
Michelin Uranium Ltd
Paladin Canada Investment (NL) Ltd
Paladin Canada Holdings (NL) Ltd
Aurora Energy Ltd
Australia
Australia
Australia
Australia
Australia
Malawi
Netherlands
Netherlands
Mauritius
Namibia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
B.V.I.
Canada
Canada
Canada
Canada
Canada
100
100
100
100
100
85
100
100
75
75
100
100
100
100
82
82
82
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
85
100
100
75
75
100
100
100
100
82
82
82
100
100
100
100
100
100
100
100
100
100
All investments comprise ordinary shares and all shares held are unquoted, with the exception of Summit’s
shares, which are quoted on the ASX and Paladin Netherlands Holdings Cooperatief U.A. which issues
membership equity.
133
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 32. GROUP INFORMATION (CONTINUED)
Summarised income statement for the year ended
30 June 2015
Financial
material non-controlling interests is provided below:
information of subsidiaries that have
Proportion of equity interest held by non-controlling
interests
Revenue
Cost of Sales
Name
COUNTRY OF
OPERATION
2016
%
2015
%
Impairment of assets/
exploration
Paladin (Africa) Limited
(PAL)
Malawi
Summit Resources Ltd
(SRL)
Langer Heinrich
Mauritius (LHM)
Australia
Mauritius
15
18
25
15
18
25
Finance costs
Other expenses
Loss before tax
Income tax
Loss after tax
LHM
US$M
PAL
US$M
SRL
US$M
191.8
(191.1)
6.7
(6.8)
0.1
-
-
-
(168.5)
(14.9)
(2.2)
-
(3.4)
(23.6)
(0.8)
(17.6)
(25.9)
(169.2)
(17.0)
-
-
(34.6)
(25.9)
(169.2)
Accumulated balances of material non-
controlling interest
2016
US$M
2015
US$M
Total comprehensive loss
(34.6)
(25.9)
(173.7)
Attributable to non-controlling
interests
(8.6)
(3.4)
(20.3)
Paladin (Africa) Limited
(84.3)
(82.9)
Dividends paid to non-
controlling interests
-
-
-
Summit Resources Ltd
Langer Heinrich Mauritius
Profit/(loss) allocated to material non-
controlling interest
Paladin (Africa) Ltd
Summit Resources Ltd
4.4
1.5
4.7
22.2
(1.5)
(3.4)
(0.2)
(20.3)
Langer Heinrich Mauritius
(20.7)
(8.6)
The summarised financial
information of these
subsidiaries is provided below. This information is
based on amounts before intercompany eliminations.
Summarised income statement for the year ended
30 June 2016
LHM
US$M
PAL
US$M
SRL
US$M
Summarised statement of financial position as at
30 June 2016
LHM
US$M
PAL
US$M
SRL
US$M
Current assets
99.4
0.9
Non current assets
342.1
127.8
Current liabilities
(38.2)
(120.9)
0.6
30.1
(0.1)
Non current liabilities
(397.4)
(569.8)
(10.0)
Total equity
5.9
(562.0)
20.6
Attributable to:
-Equity holders of parent
-Non-controlling interest
7.0
1.5
(477.7)
(84.3)
16.2
4.4
-
-
-
-
(0.3)
(9.6)
(9.9)
-
(9.9)
(9.9)
0.1
-
-
Summarised statement of financial position as at
30 June 2015
LHM
US$M
PAL
US$M
SRL
US$M
(0.8)
Current assets
-
Non current assets
Current liabilities
(0.6)
(1.3)
-
(1.3)
(2.0)
Non current liabilities
(468.5)
Total equity
Attributable to:
-Equity holders of parent
122.3
483.9
(46.2)
12.6
127.5
(123.2)
(569.0)
91.5
(552.1)
69.3
22.2
(469.2)
(82.9)
1.6
31.4
(0.1)
(10.2)
22.7
18.0
4.7
(20.7)
(1.5)
(0.2)
-Non-controlling interest
-
-
-
Revenue
Cost of Sales
184.9
(171.7)
Impairment of ore stockpiles
(168.9)
-
(15.5)
3.9
(167.3)
84.2
(83.1)
(83.1)
Impairment of assets
Finance costs
Other expenses
Loss before tax
Income tax
Loss after tax
Total comprehensive loss
Attributable to non-controlling
interests
Dividends paid to non-
controlling interests
134
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 Summarised statement of cash flow for the year
ended 30 June 2016
Operating
Investing
Financing
LHM
US$M
PAL
US$M
SRL
US$M
35.5
(8.8)
(3.6)
(0.2)
(20.0)
-
(0.1)
(0.3)
-
Net increase/(decrease) in
cash and cash equivalents
11.9
(9.0)
(0.4)
Summarised statement of cash flow for the year
ended 30 June 2015
Operating
Investing
Financing
Net increase/(decrease) in
cash and cash equivalents
LHM
US$M
PAL
US$M
SRL
US$M
29.0
(0.5)
(10.2)
-
18.8
0.6
-
0.1
(0.2)
(0.3)
-
(0.5)
NOTE 33. EVENTS AFTER THE BALANCE DATE
Other than disclosed below, since the end of the
financial year, the Directors are not aware of any other
matter or circumstance not otherwise dealt with in
this report, that has significantly or may significantly
affect the operations of the Group, the results of
those operations or the state of affairs of the Group in
subsequent years with the exception of the following,
the financial effects of which have not been provided
for in the 30 June 2016 Financial Report:
Strategic Process Achieves Agreements to Raise Over
US$200M
On 21 July 2016 and 29 July 2016, the Company
announced the outcome of its strategic initiatives
process with respect to partnerships, strategic
investment, funding and corporate transactions, with
the result being two planned transactions to raise
in excess of US$200M. One pertains to a proposed
sale of 24% of Langer Heinrich Mine (LHM) and one
pertains to a potential sale of up to 75% of Manyingee
as set out below.
Sale of 24% of LHM
Paladin currently owns 75% of LHM and has signed
a non-binding terms sheet with CNNC Overseas
Uranium Holdings Ltd (COUH) (the existing 25%
minority shareholder in LHM), to sell it a 24%
interest in LHM. If it proceeds on its current terms,
the sale is expected to raise US$175M cash for
the Company and be accompanied by long-term
for
arrangements for uranium off-take. The proposed
transaction is subject to the parties negotiating and
executing definitive documentation, including: sale
and purchase agreement; shareholders agreement;
and documentation
the uranium off-take
arrangements. We have been advised by COUH
that any definitive agreement would also require
the approval of the board of COUH’s ultimate parent
company and third-party government and regulatory
approvals. Such approvals would include China
regulatory approvals customary for an international
transaction of the proposed size. Paladin is working
towards a formal close of the transaction in fourth
quarter of 2016 calendar year. Other than as set out
in this announcement, the other key terms of this
proposed transaction remain confidential.
On completion of the transaction, Paladin will
continue to hold 51% of LHM and be the operator.
Sale of 75% of Manyingee
Paladin currently owns 100% of Manyingee and has
signed a binding terms sheet with MGT Resources
Limited (MGT) for it to make a two-stage acquisition
of 75% of Manyingee (excluding Carley Bore).
On closing of the transaction, MGT will acquire a
30% initial interest in Manyingee for US$10M cash
and will form a joint-venture over the project with
Paladin (Manyingee JV). MGT will then have an option
to acquire an additional 45% of Manyingee JV from
Paladin for US$20M cash, exercisable for 12-months
following Manyingee JV’s preparation of a plan to
conduct a field leach trial for uranium extraction by
in-situ recovery method.
Under the terms of the agreement, MGT will issue Paladin
options to subscribe for new shares equivalent to 5% of
MGT’s shares outstanding for a period of 12-months
from closing of the transaction at A$0.06 per share; and
options to subscribe for new shares equivalent to 5%
of MGT’s shares outstanding for a period of 24-months
from closing of the transaction at A$0.08 per share.
Paladin will issue MGT options to subscribe for new
shares equivalent to 2% of Paladin’s shares outstanding
for a period of 12-months from closing of the transaction
at A$0.35 per share; and options to subscribe for new
shares equivalent to 2% of Paladin’s shares outstanding
for a period of 24-months from closing of the transaction
at A$0.45 per share.
The transaction is conditional on definitive documentation
and a vote of MGT’s shareholders. MGT’s directors have
irrevocably agreed to vote in favour.
135
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 NOTE 34. NEW ACCOUNTING STANDARDS & INTERPRETATIONS
Accounting Standards and Interpretations issued but not yet effective
The following Australian Accounting Standards that have recently been issued or amended but are not yet
effective are relevant to the Group but have not been applied by the Group for the annual reporting period
ending 30 June 2016:
Application
date of
standard*
Application
date for
Group*
1 January 2018
1 June 2018
Reference
Title
Summary
AASB 9 (December 2014) is a new standard which replaces
AASB 139. This new version supersedes AASB 9 issued in
December 2009 (as amended) and AASB 9 (issued in December
2010) and includes a model for classification and measurement,
a single, forward-looking ‘expected loss’ impairment model
and a substantially-reformed approach to hedge accounting.
AASB 9 is effective for annual periods beginning on or after
1 January 2018. However, the Standard is available for early
adoption. The own credit changes can be early adopted in
isolation without otherwise changing the accounting for
financial instruments.
Classification and measurement
AASB 9 includes requirements for a simpler approach for
classification and measurement of financial assets compared
with the requirements of AASB 139. There are also some
changes made in relation to financial liabilities.
The main changes are described below.
Financial assets
a. Financial assets that are debt instruments will be
classified based on (1) the objective of the entity’s
business model for managing the financial assets; (2) the
characteristics of the contractual cash flows.
b. Allows an irrevocable election on initial recognition
to present gains and losses on investments in equity
instruments that are not held for trading in other
comprehensive income. Dividends in respect of these
investments that are a return on investment can be
recognised in profit or loss and there is no impairment or
recycling on disposal of the instrument.
c. Financial assets can be designated and measured at fair
value through profit or loss at initial recognition if doing
so eliminates or significantly reduces a measurement
or recognition inconsistency that would arise from
measuring assets or liabilities, or recognising the gains
and losses on them, on different bases.
Financial liabilities
Changes introduced by AASB 9 in respect of financial liabilities
are limited to the measurement of liabilities designated at fair
value through profit or loss (FVPL) using the fair value option.
Where the fair value option is used for financial liabilities, the
change in fair value is to be accounted for as follows:
>
>
The change attributable to changes in credit risk are
presented in other comprehensive income (OCI)
The remaining change is presented in profit or loss
AASB 9 also removes the volatility in profit or loss that was
caused by changes in the credit risk of liabilities elected to be
measured at fair value. This change in accounting means that
gains or losses attributable to changes in the entity’s own credit
risk would be recognised in OCI. These amounts recognised
in OCI are not recycled to profit or loss if the liability is ever
repurchased at a discount.
AASB 9
Financial
Instruments
136
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 Reference
Title
Summary
Application
date of
standard*
Application
date for
Group*
Impairment
The final version of AASB 9 introduces a new expected-loss
impairment model that will require more timely recognition of
expected credit losses. Specifically, the new Standard requires
entities to account for expected credit losses from when
financial instruments are first recognised and to recognise full
lifetime expected losses on a more timely basis.
Hedge accounting
Amendments to AASB 9 (December 2009 & 2010 editions
and AASB 2013-9) issued in December 2013 included the
new hedge accounting requirements, including changes to
hedge effectiveness testing, treatment of hedging costs, risk
components that can be hedged and disclosures.
Consequential amendments were also made
to other
standards as a result of AASB 9, introduced by AASB 2009-
11 and superseded by AASB 2010-7, AASB 2010-10 and AASB
2014-1 – Part E.
AASB 2014-7 incorporates the consequential amendments
arising from the issuance of AASB 9 in Dec 2014.
AASB 2014-8 limits the application of the existing versions
of AASB 9 (AASB 9 (December 2009) and AASB 9 (December
2010)) from 1 February 2015 and applies to annual reporting
periods beginning on after 1 January 2015.
AASB 2014-3 amends AASB 11 Joint Arrangements to provide
guidance on the accounting for acquisitions of interests in joint
operations in which the activity constitutes a business. The
amendments require:
a.
b.
the acquirer of an interest in a joint operation in which
the activity constitutes a business, as defined in AASB
3 Business Combinations, to apply all of the principles
on business combinations accounting in AASB 3 and
other Australian Accounting Standards except for those
principles that conflict with the guidance in AASB 11; and
the acquirer to disclose the information required by AASB
3 and other Australian Accounting Standards for business
combinations.
This Standard also makes an editorial correction to AASB 11.
AASB 15 Revenue from Contracts with Customers replaces the
existing revenue recognition standards AASB 111 Construction
Contracts, AASB 118 Revenue and related Interpretations
(Interpretation 13 Customer Loyalty Programmes, Interpretation
15 Agreements for the Construction of Real Estate, Interpretation
18 Transfers of Assets from Customers, Interpretation 131
Revenue—Barter Transactions Involving Advertising Services
and Interpretation 1042 Subscriber Acquisition Costs in the
Telecommunications Industry). AASB 15 incorporates the
requirements of IFRS 15 Revenue from Contracts with Customers
issued by the International Accounting Standards Board (IASB)
and developed jointly with the US Financial Accounting Standards
Board (FASB).
AASB 15 specifies the accounting treatment for revenue arising
from contracts with customers (except for contracts within
the scope of other accounting standards such as leases or
financial instruments).The core principle of AASB 15 is that an
entity recognises revenue to depict the transfer of promised
goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled in
exchange for those goods or services. An entity recognises
revenue in accordance with that core principle by applying the
following steps:
AASB
2014-3
Amendments
to Australian
Accounting
Standards –
Accounting for
Acquisitions
of Interests
in Joint
Operations
[AASB 1 &
AASB 11]
AASB 15
Revenue from
Contracts with
Customers
1 January 2016
1 July 2016
1 January 2018
Note A
1 July 2018
Note B
137
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 Reference
Title
Summary
Application date of
standard*
Application date for
Group*
a. Step 1: Identify the contract(s) with a customer
b. Step 2: Identify the performance obligations in the
contract
c. Step 3: Determine the transaction price
d. Step 4: Allocate the transaction price to the
performance obligations in the contract
e. Step 5: Recognise revenue when (or as) the entity
satisfies a performance obligation
AASB 2015-8 amended the AASB 15 effective date so it is
now effective for annual reporting periods commencing on
or after 1 January 2018. Early application is permitted.
AASB 2014-5 incorporates the consequential amendments
to a number Australian Accounting Standards (including
Interpretations) arising from the issuance of AASB 15.
This Standard lists the application paragraphs for each
other Standard (and Interpretation), grouped where they
are the same. Accordingly, paragraphs 5 and 22 respectively
specify the application paragraphs for Standards and
Interpretations in general. Differing application paragraphs
are set out for individual Standards and Interpretations or
grouped where possible.
The application paragraphs do not affect requirements in
other Standards that specify that certain paragraphs apply
only to certain types of entities.
AASB 2014-10 amends AASB 10 Consolidated Financial
Statements and AASB 128 to address an inconsistency
between the requirements in AASB 10 and those in AASB
128 (August 2011), in dealing with the sale or contribution
of assets between an investor and its associate or joint
venture. The amendments require:
a. a full gain or loss to be recognised when a transaction
involves a business (whether it is housed in a
subsidiary or not)
b. a partial gain or loss to be recognised when a
transaction involves assets that do not constitute
a business, even if these assets are housed in a
subsidiary.
AASB 2014-10 also makes an editorial correction to AASB
10.
AASB 2015-10 defers the mandatory effective date
(application date) of AASB 2014-10 so that the amendments
are required to be applied for annual reporting periods
beginning on or after 1 January 2018 instead of 1 January
2016.
The Standard makes amendments to AASB 101 Presentation
of Financial Statements arising from the IASB’s Disclosure
Initiative project. The amendments are designed to further
encourage companies to apply professional judgment in
determining what information to disclose in the financial
statements. For example, the amendments make clear that
materiality applies to the whole of financial statements and
that the inclusion of immaterial information can inhibit the
usefulness of financial disclosures. The amendments also
clarify that companies should use professional judgment
in determining where and in what order information is
presented in the financial disclosures.
1 January 2016
1 July 2016
1 January 2018
1 July 2018
1 January 2016
1 July 2016
AASB 1057
Application
of Australian
Accounting
Standards
AASB 2014-
10
Amendments
to Australian
Accounting
Standards – Sale
or Contribution of
Assets between
an Investor and
its Associate or
Joint Venture
AASB 2015-2 Amendments
to Australian
Accounting
Standards –
Disclosure
Initiative:
Amendments to
AASB 101
138
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 Reference
Title
Summary
AASB 2015-9 Amendments
to Australian
Accounting
Standards
– Scope and
Application
Paragraphs
[AASB 8, AASB
133 & AASB
1057]
This Standard inserts scope paragraphs into AASB 8 and
AASB 133 in place of application paragraph text in AASB
1057. This is to correct inadvertent removal of these
paragraphs during editorial changes made in August 2015.
There is no change to the requirements or the applicability
of AASB 8 and AASB 133.
Application date of
standard*
Application date for
Group*
1 January 2016
1 July 2016
AASB 16
Leases
The key features of AASB 16 are as follows:
1 January 2019
1 July 2019
Lessee accounting
>
>
>
>
Lessees are required to recognise assets and
liabilities for all leases with a term of more than 12
months, unless the underlying asset is of low value.
A lessee measures right-of-use assets similarly
to other non-financial assets and lease liabilities
similarly to other financial liabilities.
Assets and liabilities arising from a lease are
initially measured on a present value basis. The
measurement includes non-cancellable lease
payments (including inflation-linked payments),
and also includes payments to be made in optional
periods if the lessee is reasonably certain to exercise
an option to extend the lease, or not to exercise an
option to terminate the lease.
AASB 16 contains disclosure requirements for
lessees.
Lessor accounting
>
>
AASB 16 substantially carries forward the lessor
accounting requirements in AASB 117. Accordingly,
a lessor continues to classify its leases as operating
leases or finance leases, and to account for those two
types of leases differently.
AASB 16 also requires enhanced disclosures to be
provided by lessors that will improve information
disclosed about a lessor’s risk exposure, particularly
to residual value risk.
AASB 16 supersedes:
a. AASB 117 Leases;
b.
Interpretation 4 Determining whether an
Arrangement contains a Lease;
c. SIC-15 Operating Leases—Incentives; and
d. SIC-27 Evaluating the Substance of Transactions
Involving the Legal Form of a lease.
The new standard will be effective for annual periods
beginning on or after 1 January 2019. Early application is
permitted, provided the new revenue standard, AASB 15
Revenue from Contracts with Customers, has been applied,
or is applied at the same date as AASB 16.
139
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 Application date of
standard*
Application date
for Group*
1 January 2017
1 July 2017
1 January 2017
1 July 2017
1 January 2018
1 July 2018
Reference
Title
Summary
2016-1
2016-2
IFRS 2
(Amendments)
Amendments
to Australian
Accounting
Standards –
Recognition
of Deferred
Tax Assets for
Unrealised
Losses
[AASB 112]
Amendments
to Australian
Accounting
Standards –
Disclosure
Initiative:
Amendments to
AASB 107
Classification
and
Measurement of
Share-based
Payment
Transactions
(Amendments to
IFRS 2)
This Standard amends AASB 112 Income Taxes (July 2004)
and AASB 112 Income Taxes (August 2015) to clarify the
requirements on recognition of deferred tax assets for
unrealised losses on debt instruments measured at fair
value.
(August 2015)
This Standard amends AASB 107 Statement of Cash
Flows
to require entities preparing
financial statements in accordance with Tier 1 reporting
requirements to provide disclosures that enable users
of financial statements to evaluate changes in liabilities
arising from financing activities, including both changes
arising from cash flows and non-cash changes.
This standard amends to IFRS 2 Share-based Payment,
clarifying how to account for certain types of share-
based payment transactions. The amendments provide
requirements on the accounting for:
>
>
>
The effects of vesting and non-vesting conditions
on the measurement of cash-settled share-based
payments.
Share-based payment transactions with a net
settlement feature for withholding tax obligations.
A modification to the terms and conditions of a
share-based payment that changes the classification
of the transaction from cash-settled to equity-
settled.
* Designates the beginning of the applicable annual reporting period unless otherwise stated.
The Group is in the process of determining what impact the following accounting standards and amendments to
the accounting standards will have on the financial statements, when applied in future periods. These include:
AASB 9 Financial Instruments, AASB 15 Revenue from Contracts with Customers and AASB 16 Leases. The
Group has elected not to early adopt these new standards or amendments in the financial statements.
For Standards and Interpretations effective from 1 July 2016, it is not expected that the new Standards and
Interpretations will significantly affect the Group’s financial performance.
140
PALADIN ENERGY LTD | ANNUAL REPORT 2016 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 T
R
O
P
E
R
L
A
C
N
A
N
F
I
I
DIRECTORS DECLARATION
In accordance with a resolution of the Directors of Paladin Energy Ltd, I state that:
1.
In the opinion of the Directors:
a. the financial statements and notes of Paladin Energy Ltd for the financial year ended 30
June 2016 are in accordance with the Corporations Act 2001, including:
ii. giving a true and fair view of the consolidated entity’s financial position as at 30 June
2016 and of its performance for the year ended on that date; and
iii. complying with Australian Accounting Standards
(including the Australian
Accounting Interpretations) and the Corporations Regulations 2001;
d. the financial statements and notes also comply with International Financial Reporting
Standards as disclosed in note 3;
e. subject to the matters set out in Note 4 to the Financial Statements, there are reasonable
grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
2. This declaration has been made after receiving the declarations required to be made to the
Directors by the Chief Executive Officer and the Chief Financial Officer in accordance with
section 295A of the Corporations Act 2001 for the financial year ending 30 June 2016.
On behalf of the Board
Rick Crabb
Chairman
Perth, Western Australia
24 August 2016
141
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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A
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N
A
N
F
I
I
T
R
O
P
E
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T
I
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U
A
T
N
E
D
N
E
P
E
D
N
I
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
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R
O
P
E
R
L
A
C
N
A
N
F
I
I
T
R
O
P
E
R
T
I
D
U
A
T
N
E
D
N
E
P
E
D
N
I
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PALADIN ENERGY LTD | ANNUAL REPORT 2016
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ADDITIONAL INFORMATION
Pursuant to the Listing Requirements of ASX as at 9 August 2016:
a. Distribution and number of holders
Range
Total Holders
No. of Shares
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - maximum
7,900
8,648
3,208
5,713
1,103
26,572
3,921,825
23,180,080
25,081,011
189,477,552
1,471,183,344
1,712,843,812
13,084 shareholders hold less than a marketable parcel of shares.
b. The twenty largest shareholders hold 65.77% of the total shares issued
Holder
No. of Shares
%
N
O
I
T
A
M
R
O
F
N
I
L
A
N
O
I
T
I
D
D
A
Citicorp Nominees Pty Limited
HOPU Clean Energy (Singapore) Pte Ltd
HSBC Custody Nominees (Australia) Limited
CDS & Co
J P Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited-GSCO ECA
CEDE & Co
Energia Minerals Limited
HSBC Custody Nominees (Australia) Limited - A/C 3
ABN Amro Clearing Sydney Nominees Pty Ltd
Mr John Borshoff
UBS Nominees Pty Ltd
Zero Nominees Pty Ltd
Merrill Lynch (Australia) Nominees Pty Limited
National Nominees Limited
Ms Seng Bee Teoh & Mr Sin Mong Wong
BNP Paribas Noms Pty Ltd
Grandor Pty Ltd
HSBC Custody Nominees (Australia) limited – A/C 2
Brispot Nominees Pty Ltd
Jermey James Burfoot & Nikolas Donald Burfoot
258,085,532
249,888,360
193,255,692
139,077,777
62,575,295
37,986,222
36,472,984
16,293,697
16,244,303
15,313,833
12,175,015
11,537,652
11,100,000
11,036,598
10,481,388
10,100,000
6,391,230
5,476,260
4,951,178
4,315,651
3,800,000
15.07
14.59
11.28
8.12
3.65
2.22
2.13
0.95
0.95
0.89
0.71
0.67
0.65
0.64
0.61
0.59
0.37
0.32
0.29
0.25
0.22
Substantial shareholders as disclosed in
substantial shareholder notices given to the
Company are as follows:
• HOPU Clean Energy (Singapore) Pte Ltd
◦ 249,888,360
• GIC Private Limited (formerly known as
“Government of Singapore Investment
Corporation Pte Ltd”
◦ 108,647,452
1,116,558,667
65.17
c. Voting rights
Ordinary Shares
For all shares, voting rights are one vote per
member on a show of hands and one vote per
share in a poll.
Unlisted Options
There are no voting rights attached to options.
144
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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D
D
A
Share Appreciation Rights
There are no voting rights attached to share
appreciation rights.
d. Securities Subject to Voluntary Escrow
There are no ordinary fully paid shares subject to
voluntary escrow.
• 1,000,000 options exercisable at $0.20 and
expiring 10/08/2018
• 1,000,000 options exercisable at $0.20 and
expiring 8/11/2018
• 1,000,000 options exercisable at $0.20 and
expiring 23/12/2018
e. Unquoted securities
Unlisted Options
The Company has 3,000,000 unlisted options on
issue, issued to Alex Molyneux the CEO pursuant to
the terms of his engagement letter:
Unlisted Share Appreciation Rights
The Company has 7,125,000 share appreciation
rights on issue, issued in accordance with the Share
Rights Plan approved by shareholders in November
2015. The number of beneficial holders of share
appreciation rights totals 30.
145
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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A
C
N
A
N
F
I
I
N
O
I
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A
M
R
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F
N
I
L
A
N
O
I
T
I
D
D
A
ADDITIONAL INFORMATION (CONTINUED)
TENEMENTS HELD
URANIUM PROJECTS
NAMIBIA – AFRICA
Project
Tenements
Interest %
JV Partner/s
Operator
Note
1
1
2
2
2
2
2
2
2
3,4
3,4
LHU
LHU
PAL
PAL
PAL
PAL
PAL
PAL
PAL
AUR
SRA
SRA
FSN
FSN
-
-
-
-
-
-
-
-
-
Langer
Heinrich
Gawib
1
1
MLI
MLI
100.00%
(A)
100.00%
MALAWI – AFRICA
1
1
1
1
1
1
1
MLI
EPL
EPL
EPL
EPL
EPL
EPL
(A)
(A)
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
(A)
100.00%
Kayelekera
Kopakopa
Nthalire
Uliwa
Rukuru
Mapambo
Ngana
Central
Mineral Belt
LABRADOR/NEWFOUNDLAND – CANADA
31 MLC
100.00%
-
Isa North
5
EPMs
Valhalla
North
4
1
2
MDLs
EPM
MDLs
QUEENSLAND
82.08%
82.08%
100.00%
100.00%
(see Note 4)
(see Note 4)
-
-
146
PALADIN ENERGY LTD | ANNUAL REPORT 2016
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N
A
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F
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F
N
I
L
A
N
O
I
T
I
D
D
A
Project
Tenements
Interest %
JV Partner/s
Operator
Note
NORTHERN TERRITORY
Angela and
Pamela
1
1
EL
EL
100.00%
(A)
100.00%
Bigrlyi
10
ELRs
41.71%)
11 MCs
(A)
41.71%)
3
1
1
1
ELs
MLN
ELR
ELR
41.71%)
(A)
41.71%)
58.13%
47.96%
Walbiri
Malawiri
Minerva
12
ELRs
(A)
100.00%
Beatrice
South
1
EL
(A)
33.33%
Mount Gilruth 1
EL
(A)
33.33%
Energy Metals
Limited
Southern Cross
Exploration NL
Energy Metals
Limited
Energy Metals
Limited
PDN
PDN
EME
EME
EME
EME
EME
EME
NTU
Afmeco Mining
and Exploration
Pty Ltd
Afmeco Mining
and Exploration
Pty Ltd
Afmeco
Afmeco
Manyingee
Carley Bore
Oobagooma
3
3
1
MLs
ELs
EL
WESTERN AUSTRALIA
100.00%
100.00%
(A)
100.00%
-
-
-
NON-URANIUM PROJECTS
QUEENSLAND
Western Isa Joint Venture (See Note 4)
(Summit Resources (Aust) Pty Ltd, Pacific Mines Pty Ltd)
Isa South
May Downs
Mount Kelly
Constance
Range
6
1
2
1
4
EPMs
EPM
EPMs
EPM
EPMs
20.00%
18.00%
20.00%
20.00%
20.00%
Aeon Metals
Limited
Aeon Metals
Limited
Centaurus
Metals Limited
Aeon Metals
Limited
Aeon Metals
Limited
Aeon Metals
Limited
PEM
PEM
PEM
AML
AML
AML
AML
AML
5
5
5
5
5
147
PALADIN ENERGY LTD | ANNUAL REPORT 2016
ADDITIONAL INFORMATION (CONTINUED)
Project
Tenements
Interest %
JV Partner/s
Operator
Note
Reaphook JV
1
EL
7.50%
Perilya Limited
Perilya
SOUTH AUSTRALIA
Signature
Resources NL
Operators
Paladin Equity
(direct and indirect)
Note
AFMECO
Afmeco Mining and Exploration Pty Ltd
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A
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N
A
N
F
I
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N
O
I
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A
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F
N
I
L
A
N
O
I
T
I
D
D
A
AML
AUR
CNNC
EME
FSN
IEL
LHU
MIU
NTU
PAC
PAL
PEM
SRA
PDN
Aeon Metals Limited
Aurora Energy Ltd
CNNC Overseas Uranium Holding Limited
Energy Metals Limited
Fusion Resources Pty Ltd
Indo Energy Ltd
Langer Heinrich Uranium (Pty) Ltd
Mount Isa Uranium Pty Ltd
Northern Territory Uranium Pty Ltd
Pacific Mines Pty Ltd
Paladin (Africa) Ltd
Paladin Energy Minerals NL
0%
0%
100%
0%
0%
100%
100%
75%
100%
100%
100%
85%
100%
1
1
2
3
Summit Resources (Aust) Pty Ltd
82.08%
Paladin Energy Ltd
PERILYA
Perilya Limited
0%
Notes
[1] Paladin holds an ultimate 75% interest in LHUPL with 25% held by CNNC.
[2] Paladin holds 85% equity in PAL with 15% equity having been issued to the Government of Malawi pursuant to the
terms of the Development Agreement for KM between the Government of Malawi, PAL and Paladin Energy Minerals
NL.
[3] Paladin’s interest in these tenements is held by virtue of Paladin’s 82.08% equity holding in Summit Resources Limited
which in turn holds 100% equity interest in Summit Resources (Aust) Pty Ltd (“SRA”) and Pacific Mines Pty Ltd.
[4] The Valhalla and Skal uranium deposits lie within the Isa North tenement block within defined blocks of land (17km2
and 10km2 respectively) subject to the Isa Uranium Joint Venture between SRA (50% and Operator) and Mount Isa
Uranium Pty Ltd (50%).
[5] Aeon Metals Limited earned 80% equity in the Western Isa Joint Venture tenements through expenditure of A$8M
within three years of commencement (10 December 2007). SRA and Pacific Mines Pty Ltd have retained up to 20%
equity in each of these tenements. Aeon Metals Limited were formally known as Aston Metals (Qld) Limited.
Exploration Licence (Australia)
Exclusive Prospecting Licence (Africa)
Exploration Permit for Minerals (Australia)
Exploration Licence in Retention (Australia)
Mineral Claim (Australia)
Tenement Types
EL
EPL
EPM
ELR
MC
MDL Mineral Development Licence (Australia)
ML
MLI
MLC Mineral Licence (Newfoundland/Labrador)
(A)
Mining Lease (Australia)
Mining Licence (Africa)
Pending Application
148
PALADIN ENERGY LTD | ANNUAL REPORT 2016
LIST OF ABBREVIATIONS
A$
bcm
BFS
BRP
CCD
C&M
DFS
Australian dollars
bank cubic metres
bankable feasibility study
bicarbonate recovery plant
counter current decantation
care and maintenance
m
Ma
MIK
mm
MMI
mSv
metres
million years
multiple indicator kriging
millimetres
mobile metal ion
millisiverts
definitive feasibility study
Mtpa
million tonnes per annum
DIFR
disabling incident frequency rate
ft
g
feet
gram
NI 43-101
National Instrument 43-101 – Standards of
Disclosure for Mineral Projects of the Canadian
Securities Administrators
NOSA
National Occupational Safety Association
g/m3
grams per cubic metre
NPV
net present value
T
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F
N
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A
N
O
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D
A
grams per tonne
hours
OK
pa
ordinary kriging
per annum
International Organisation for Standardisation
PAL
Paladin (Africa) Limited
g/t
hr
ISO
ISR
in situ recovery
JORC
Joint Ore Reserves Committee
K
kg
kg/t
km
KM
km2
kW
lb
thousand
kilogram
kilogram per tonne
kilometres
Kayelekera Mine
square kilometres
kilowatts
pounds
LHM
Langer Heinrich Mine
LHUPL
Langer Heinrich Uranium (Pty) Ltd
LTI
lost time injury
LTIFR
lost time injury frequency rate
M
Mlb
million
million pounds
PFS
ppb
ppm
pre-feasibility study
parts per billion
parts per million
QAQC
quality assurance and quality control
QC
RC
RIP
t
quality control
reverse circulation
resin-in-pulp
tonnes
t/m3
tonnes per cubic metre
tpa
tph
U
U3O8
US$
w:o
tonnes per annum
tonnes per hour
uranium
uranium oxide
US dollars
waste to ore ratio
149
PALADIN ENERGY LTD | ANNUAL REPORT 2016
SHAREHOLDER REPORTING TIMETABLE
Please note the lodgement dates are proposed, with applicable due dates provided, as
appropriate.
IMPORTANT DATES
2016
17 October 2016 ............... September ASX Quarterly Activities Report (due 31 October 2016)
15 November 2016 ........... September Quarterly Financial Statements including MD&A (TSX)
16 November 2016 ........... Conference Call and Investor Update (proposed date)
18 November 2016 ........... Annual General Meeting to be held in Perth, Western Australia
2017
18 January 2017 .............. December ASX Quarterly Activities Report (due 31 January 2017)
14 February 2017 ............. Half Yearly Financial Statements incorporating December Quarter and
MD&A (Appendix 4D)
15 February 2017 ............ Conference Call and Investor Update (proposed date)
19 April 2017 .................... March ASX Quarterly Activities Report (due 28 April 2017)
9 May 2017 ...................... March Quarterly Financial Statements including MD&A (TSX)
10 May 2017 .................... Conference Call and Investor Update (proposed date)
18 July 2017 .................... June ASX Quarterly Activities Report (due 31 July 2017)
22 August 2017 ................ Audited Annual Financial Statements for the year ended 30 June 2017
including MD&A & (Appendix 4E)
23 August 2017 ................ Conference Call and Investor Update (proposed date)
18 October 2017 ............... September ASX Quarterly Activities Report (due 31 October 2017)
14 November 2017 ........... September Quarterly Financial Statements including MD&A (TSX)
15 November 2017 ........... Conference Call and Investor Update (proposed date)
17 November 2017 ........... Annual General Meeting to be held in Perth, Western Australia
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All press releases, financial statements and other
information are available on our website
www.paladinenergy.com.au.
Investor Relations
Australia – Corporate Office
Mr Andrew Mirco
Level 4, 502 Hay Street
Subiaco Western Australia 6008
(PO Box 201, Subiaco, 6904)
Telephone: (+61 8) 9381 4366
Facsimile: (+61 8) 9381 4978
Email: andrew.mirco@paladinenergy.com.au
Auditors
Ernst & Young
11 Mounts Bay Road
Perth Western Australia 6000
Stock Exchange Listings
Australian Securities Exchange
and Toronto Stock Exchange
Code: PDN
Munich, Berlin, Stuttgart
and Frankfurt Stock Exchanges
Code: PUR
Namibian Stock Exchange
Code: NM-PDN
CORPORATE
DIRECTORY
Directors
Non-executive Chairman
Mr Rick Crabb
CEO
Mr Alexander Molyneux
Non-executive Directors
Mr Donald Shumka
Mr Peter Donkin
Mr Philip Baily
Mr Wendong Zhang
Company Secretary
Mr Ranko Matic
Registered Office
Level 4, 502 Hay Street
Subiaco Western Australia 6008
Telephone: (+61 8) 9381 4366
Facsimile: (+61 8) 9381 4978
Email: paladin@paladinenergy.com.au
Web: www.paladinenergy.com.au
Share Registries
Australia
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth Western Australia 6000
Telephone: 1300 850 505 (within Australia)
or (+61 3) 9415 4000 (outside Australia)
Facsimile: (+61 3) 9473 2500
Canada
Computershare Investor Services Inc.
100 University Avenue, 8th Floor
Toronto, Ontario M5J 2Y1
Telephone: 1 800 564 6253 (within North
America) or (+1) 514 982 7555
Facsimile: (+1) 416 263 9394
or 1 888 453 0330 (within North America)
Paladin Energy Ltd is a company limited by shares,
incorporated and domiciled in Australia. Its
registered office and principal place of business is:
Paladin Energy Ltd
Level 4, 502 Hay Street
SUBIACO WA 6008
Through the use of the internet, we have ensured
that our corporate reporting is timely, complete, and
available globally at minimum cost to the Company.
151
PALADIN ENERGY LTD | ANNUAL REPORT 2016
Paladin Energy Ltd